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Full text of "North Carolina Register v.12 no. 7 (10/1/1997)"

' NORTH CAROLINA 

REGISTER 



1 J;l ^ 3 . 









VOLUME 12 • ISSUE 7 • Pages 505 - 611 
October 1, 1997 



IN THIS ISSUE 

Executive Order 

Voting Rights Letter 

Commerce 

Environment, Health, and Natural Resources 

General Contractors, Board for Licensing 

Housing Finance Agency 

Human Resources 

Justice 

Mortuary Science, Board of 

Opticians, Board of 

Pharmacy, Board of 

Plumbing, Heating and Fire Sprinkler Contractors 

Public Education 

Secretary of State 

Transportation 

Rules Review Commission 

Contested Case Decisions 






..| 



PUBLISHED BY 

The Office of Administrative Hearings 
Rules Division 
PO Drawer 27447 
Raleigh, NC 27611- 744 7 
Telephone (919) 733-2678 
Fax (919) 733-3462 



This publication is printed on permanent, acid-free paper in compliance with G.S. 125-11.13 



For those persons that have questions or concerns regarding the Administrative Procedure Act or 
any of its components, consult with the agencies below The bolded headings are typical issues 
which the given agency can address, but are not inclusive. 



Rule Notices. Filings. Register. Deadlines, Copies of Proposed Rules, etc. 

Office of Administrative Heanngs 

Rules Di\ision 

Capehart-Crocker House (919) 733-2678 

424 North Blount Street (919) 733-3462 FAX 

Raleigh. North Carolina 27601-2817 



contact; Molh Masich. Director APA Services 
Rubv Creech. Publications Coordinator 



mmasich'floah state nc us 
rcreechSoah state. nc. us 



Fiscal Notes & Economic Analysis 

Office of State Budget and Management 

1 16 West Jones Street 

Raleigh. North Carolina 27603-8005 

contact: Mark Sisak. Economist III 
Anna Teffl. Economist II 



(919)733-7061 
(919) 733-0640 FAX 

msisak'S^osbm state nc us 
atefftfiosbm state. nc. us 



Rule Review and Legal Issues 

Rules Re\ lew Commission 
1307 Glemvood Ave . Suite 159 
Raleigh. North Carolina 27605 

contact: Joe DeLuca Jr . Staff Director Counsel 
Bobbv Br\ an, Staff Attorney 



(919)733-2721 
(919) 733-9415 FAX 



Legislative Process Concerning Rule Making 

Joint Legislatne Administrative Procedure 0\ ersight Committee 

545 Legislatne Office Building 

300 North Salisbun Street (919) 733-2578 

Raleigh. North Carolina 2761 1 (919) 715-5460 FAX 



contact: Man- Shuping. Staff Liaison 



marys@ms.ncga.state.nc.us 



County and Municipality Government Questions or Notification 

NC Association of County Commissioners 

215 North Dawson Street (919) 715-2893 

Raleigh. North Carolina 27603 

contact: Jim Blackburn or Rebecca Troutman 



NC League of Municipalities 
215 North Dawson Street 
Raleigh. North Carolina 27603 

contact: Paula Thomas 



(919)715-4000 



NORTH CAROLINA 
REGISTER 



IN THIS ISSUE 




Volume 12, Issue 7 
Pages 505-611 



October 1, 1997 



This issue contains documents officially filed 
through September 10, 1997. 



Office of Administrative Hearings 

Rules Division 

424 North Blount Street (27601) 

PO Drawer 27447 

Raleigh. NC 27611-7447 

(919) 733-2678 

FAX (919) 733-3462 



Julian Mann III, Director 

James R. Scarcella Sr., Deputy Director 

Molly Masich, Director of APA Services 

Ruby Creech, Publications Coordinator 

Jean Shirley, Editorial Assistant 
Linda Richardson, Editorial Assistant 



I. EXECUTnT ORDERS 

Executive Orders 117 505-506 

II. IN ADDITION 

Voting Rights Letter 507 

III. RULE-MAKING PROCEEDINGS 

Environment, Health, and Natural Resources 

Health Services 509 

Justice 

Shenffs' Ed & Training Standards Commission 508 - 509 

Licensing Boards 

Plumbing, Heating and Fire Sprinkler Contractors 509 ■ 510 

IV. PROPOSED RULES 

Environment, Health, and Natural Resoiu-ces 

Environmental Management 515 - 517 

Healdi SerNices 519-524 

Wildlife Resources Commission 517 - 519 

Human Resources 

Medical Assistance 511-515 

Secretar> of Human Resources 511 

Licensing Boards 

General Contractors, Board for Licensing 524 - 527 

Pharmacy. Board of 527-532 

V. TE.MPORARY RULES 
Licensing Boards 

Mortuarv' Science. Board of 556 - 557 

Opticians. Board of 557 

Plumbing. Heating & Fire Sprinkler Contractors 557 - 560 

Public Education 

Public School Administration. Standards Board for 533 - 534 

Secretary of State 

Secretan' of State. Depanment of 534 - 556 

VI. APPROVED RULES 561-573 

Commerce 

Credit Union Division 
Environment, Health, and Natural Resources 

Coastal Resources Commission 

Environmental Management Commission 

Marine Fishenes Commission 
Housing Finance Agency 

Housing Finance Agency 
Human Resources 

Facility Services 

Social Services Commission 
Justice 

Alarm Systems Licensing Board 
Transportation 

Hiahwavs. Division of 



VII. RULES REVIEW COMMISSION 574 

VIII. CONTESTED CASE DECISIONS 

Index to ALJ Decisions 575 

Text of Selected Decisions 

96 EDC 1095 581 

97 ABC 0706 609 

IX. CL^njXATIVE INDEX 1-48 



580 

608 
610 



Digitized by the Internet Archive 

in 2011 with funding from 

University of North Carolina at Chapel Hill 



http://www.archive.org/details/northcarolinareg127nort 



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EXECUTIVE ORDERS 



EXECUTIVE ORDER NO. 117 

GOVERNOR'S COMMISSION ON JUVENILE 

CRIME AND JUSTICE 

WHEREAS, Nonh Carolinians deserve to live, work 
and attend school in communities without fear of crime, drugs 
and violence; and, 

WHEREAS, the state has taken important steps to 
protect its citizens in recent years by providing tougher 
sentences for violent criminals, keeping dangerous criminals 
behind bars longer, and boosting efforts to deter young people 
from a life of crime; and, 

WHEREAS, North Carolina continues to face 
challenges fighting, crime, especially juvenile crime, which is 
rising across the country; and. 



of the Governor's Crime Commission; and four at-large 
members representing law enforcement, child advocacy 
interests, public schools, and the general public. There shall 
also be five non-voting ex-officio members appointed by the 
Governor as follows: the Secretary of Correction; the Secretary 
of Administration, the Secretary of Health and Human 
Resources; the State Superintendent of Public Instruction; and, 
the Director of the Administrative Office of the Courts. 

Section 2^ Chair. Vice. Chair, and Honorary Co-Chairs. 

The Governor shall serve as the Chair of the Commission 
and have the power to vote. The Secretary of Crime Control 
and F*ublic Safety shall be the Vice-Chair and shall serve in the 
absence of the Chair. The Speaker of the North Carolina House 
of Representatives and the President Pro Tempore of the North 
Carolina Senate shall serve as Honorary Co-Chairs of the 
Commission. 



WHEREAS, in North Carolina juvenile arrests for 
violent crime have risen a dramatic 172%, arrests of juveniles 
for weapon offenses have skyrocketed 482%, and arrests of 
juveniles for drug violations have soared 523% over the last ten 
years; and, 

WHEREAS, North Carolina's elected officials and 
community leaders are committed to developing strong, new 
approaches to fighting juvenile crime by making sure young 
offenders know they will face tough consequences for their 
actions, holding parents more responsible for their children, 
and keeping at-risk youngsters on the right path and away from 
crime and drugs with stronger community-based prevention 
efforts, and. 



Section i. Commission Duties and Responsibilities. 

The Commission shall conduct a thorough and 
comprehensive review of the juvenile criminal justice system 
and shall make specific recommendations in the following 
areas: 

(a) Revisions of the Juvenile Code; 

(b) Juvenile crime prevention efforts, initiatives, and 
drug education; 

(c) Appropriate and accountable sanctions for all 
juvenile offenders; and, 

(d) The state agency structure of the juvenile justice 
system. 

The Commission shall also address other related issues 
assigned to it by the Chair. 



WHEREAS, leaders should develop a plan to fight 
juvenile crime by revising the juvenile justice system to bring 
it in line with the kinds of crimes committed by juveniles 
today, stepping up the state's prevention efforts to keep at-risk 
young people from turning to a life of crime and drugs, 
developing sanctions for first-time juvenile offenders and 
tougher punishment for violent offenders, and streamlining, the 
state agency structure for dealing with juvenile crime. 

NOW, THEREFORE, by the power vested in me as 
Governor by the laws and Constitution of North Carolina, IT 
IS ORDERED: 

Section L Governor's Commission on Juvenile Crime and 
Justice Established. 

The Governor's Commission on Juvenile Crime and 
Justice is hereby established. The Commission shall consist of 
eighteen voting members appointed by the Governor as follows: 
the Secretary of Crime Control and Public Safety; the Chief 
Justice of the Supreme Court of North Carolina, four members 
of the North Carolina Senate; four members of the North 
Carolina House of Representatives; one Superior Court Judge; 
one District Court Judge; one District Attorney; the chairman 



Section 4^ Commission Meeting s. 

The Commission shall meet at least twice monthly and 
shall meet more often at the call of the Chair. Meetings shall be 
conducted in compliance with state's Open Meetings Law. 

Section 5. Advisory Groups. 

The Governor shall establish four advisory groups to 
provide recommendations to the Commission. Members of each 
advisory group shall be appointed by the Governor. The four 
advisory groups shall be as follows: 

(a) Juvenile Code Revision Advisory Group; 

(b) Delinquency Prevention and Drug Education 
Advisory Group; 

(c) Accountable Sanctions Advisory Group; and, 

(d) Juvenile Justice System Agency Structure 
Advisory Group. 

The Governor shall appoint an Advisory Chair for each 
advisory group. The advisory groups shall meet monthly and 
shall meet more often at the call of the Advisory Chair. 
Meetings shall be conducted in compliance with the state's 
Open Meeting Laws. 

Section 6^ Cooperation of Governmental A gencies. 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



505 



EXECUTIVE ORDERS 



The heads of all state departments and agencies shall, 
to the extent permitted by law, provide the Commission with 
information required to achieve the purposes of this Order. 

Section 1_^ Public Hearings. 

The Commission is authorized to hold public hearings 
on the specific issues under consideration by it, to visit 
facilities and institutions related to or involved in the specific 
issues under its consideration, and to receive input from 
citizens about these issues. 

Section 8^ Per Diem. Travel, and Subsistence. 

Members of the Commission and the four advisory 
groups shall serve without compensation but, subject to 
availabilit)' of funds, shall be eligible for per diem, travel, and 
subsistence as provided by North Carolina rules, regulations, 
and General Statutes. 

Section 9. Reporting Requirements. 

The Commission shall present a final report including 
appropriate administrative and legislative recommendations to 
the Governor no later than February 2, 1998. 

Section 10. Staff support. 

The Governor shall appoint an Executive Director who 
shall provide staff for the Commission through funds 
administered by the Governor's Crime Commission. 

Section 1 1 . Effective Date. 

This order is effective immediately and shall remain in 
effect until rescinded by the Governor. 

Done in the Capital City of Raleigh, North Carolina, 
this the 7th day of September, 1997. 



506 NORTH CAROLINA REGISTER October 1, 1997 12:7 



IN ADDITION 



U.S. Department of Justice 
Civil Rights Division 



IKP:DHH:NT:jdp Voting Section 

DJ 166-012-3 PO. Box 66128 

97-2027 Washington, D. C 20035-6128 



David A. Holec, Esq. 

City Attorney 

P.O. Box -/207 

Greenville, North Carolina 27835 



August 18, 1997 



Dear Mr. Holec: 

I This refers to the annexation (Ordinance No. 97-57) and its designation to a district of the City of Greenville in Pitt 

County, North Carolina, submitted to the Attorney General pursuant to Section 5 of the Voting Rights Act, 42 U.S.C. 1973c. 
We received your submission on July 14, 1997. 

The Attorney General does not interpose any objection to the specified changes. However, we note that Section 5 
expressly provides that the failure of the Attorney General to object does not bar subsequent litigation to enjoin the enforcement 
of the changes. In addition, as authorized by Section 5, we reserve the right to reexamine this submission if additional 
information that would otherwise require an objection comes to our attention during the remainder of the sixty-day review 
period. See the Procedures for the Administration of Section 5 (28 C.F.R. 51.41 and 51.43). 



Sincerely, 

Isabelle Katz Pinzler 

Acting Assistant Attorney General 

Civil Rights Division 



By: 



Elizabeth Johnson 
Chief, Voting Section 



\ 



12:7 NORTH CAROLINA REGISTER October I, 1997 507 



RULE-MAKING PROCEEDINGS 



A Nonce of Rule-making Proceedings is a siaiemeni of sub/eel matter of the agency's proposed rule making. The 
agency must publish a notice of the subject matter for public comment at least 60 days prior to publishing the proposed 
text of a rule. Publication of a temporary rule senes as a Notice of Rule-making Proceedings and can be found in the 
Register under the section heading of Temporary Rules. A Rule-making Agenda published by an agency serves as Rule- 
making Proceedings and can be found in the Register under the section heading of Rule-making Agendas. Statutory 
reference: G.S. 150B-21.2. 



TITLE 12 - DEPARTMENT OF JUSTICE 

CHAPTER 10 - N.C. SHERIFFS' EDUCATION AND 
TRAINING STANDARDS COMMISSION 

SUBCHAPTER lOB - N.C. SHERIFFS' EDUCATION 
AND TRAINING STANDARDS COMMISSION 

A Jotice of Rule-making Proceedings is hereby given by the 
liNC Sheriffs' Education and Training Standards 
Commission in accordance with G.S. 150B-21.2. The agency- 
shall subsequently publish in the Register the text of the 
rule(s) it proposes to adopt as a result of this notice of rule- 
making proceedings and any comments received on this 
notice. 

Citation to Existing Rules Affected by this Rule-Making: 

12 NCAC lOB .0103. .0401 - .0403, .0406 - .0409. .0701 - 
.0702, .1101 - .1104. .1301 - .1304. .2002. .2101 - .2102. 
.2104 - .2105. Other rules may be proposed in the course of 
the rule-making process. 

Authority for the rule-making: G.S. 17-E 

Statement of the Subject Matter: 

12 NCAC lOB .0103 - Sets out definitions for terms used 

within 12 NCAC lOB. 

12 NCAC lOB .0401 - Identifies who must meet the 

certification requirements as set out in 12 NCAC lOB. 

12 NCAC 108 .0402 - Requires all justice officers to serve a 

probationary period and specifies when that one-year period 

begins. 

12 NCAC lOB .0403 - Sets out requirements which must be 

met for probationary certification to be issued. 

12 NCAC lOB .0406 - Sets out requirements which must be 

met for the lateral transfer and reinstatement of certification. 

12 NCAC lOB .0407 - Sets out requiremetus for the 

certification of a former Sheriff as a justice officer. 

12 NCAC lOB .0408 - Sets out what documentation must be 

submitted for probationary certification to be issued. 

12 NCAC lOB .0409 - Sets out what certification records the 

employing agencx must retain. 

12 NCAC lOB .0701 - Sets out the purpose for Section .0700 

to establish minimum standards for training of sheriffs' 

department personnel. 

12 NCAC lOB .0702 - Sets out the administration of justice 

officer schools. 

12 NCAC lOB .1101 - Sets out the purpose for Section .1100 

to establish a service award program. 



1) 

2) 



12 NCAC lOB .1102 - Sets out the general provisions for 
eligibility for ser\'ice awards. 

12 NCAC lOB .1103 - Sets out specific requirements for 
eligibility for the Intermediate Service Award. 
12 NCAC lOB .1104 - Sets out specific requirements for 
eligibility for the Advanced Service Award. 
12 NCAC lOB .1300 - Reser\'ed for fiuure codification. 
12 NCAC lOB .2002 - Sets out topical areas established as 
Justice Officers ' In-Senice Training Program. 
12 NCAC lOB .2101 - Sets out Department Head 
Responsibilities for the Justice Officers ' Firearms In-service 
Training Requalification Program. 

12 NCAC lOB .2102 - Sets out requirements and 
responsibilities established for instructors in the Firearms In- 
sen'ice Training Requalification Program. 
12 NCAC lOB .2104 - Sets out who must comply with the In- 
Service Requalification and what must be done to comply. 
12 NCAC 1 OB .2105 - Sets what happens to those who fail to 
comply. 

Reason for Proposed Action: 

12 NCAC lOB .0103 - Rule changes will: 

define telecommunicator's date of appointment; 

modify the definition of "department head" to 

include the chief administrator of communication 

centers: 

3) expand the definition of dual certification to 
include telecommunicators; and 

4) define telecommunicator. 

12 NCAC lOB .0401 - Rule change will set out that 

telecommunicators under the control of the Sheriff must be 

certified and telecommunicators not under the Sheriff's 

control max he presented to the Division for certification. 

12 NCAC lOB .0402 - Rule change will set out when the 

probationary period for a telecommunicator will begin. 

12 NCAC lOB .0403 - Rule change will make rule applicable 

to telecommunicators . 

12 NCAC lOB .0406 - Rule change will allow for the 

reinstatement of a telecommunicator's certification. 

12 NCAC lOB .0407 - Rule change will allow for the 

certification of a former Sheriff as a telecommunicator. 

12 NCAC lOB .0408 - Rule change will allow for the waiver 

of compliance with this Rule, provided an individual holds 

certification in another capacity (to include 

telecommunicator) at the same agency and changes capacity 

(to include telecommunicators) with no break in senice. 

12 NCAC lOB .0409 - Rule change wilt allow for the waiver 

of compliance with this Rule, provided an individual holds 

certification in another capacity at the same agency- and 



508 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



RULE-MAKING PROCEEDINGS 



changes capacity with no break in service. 

12 NCAC lOB .0701 - Rule change will substitute "justice 

officers " for "sheriffs ' department personnel ", so that it will 

apply to telecommunicators, as well as deputy sheriffs and 

detention officers. 

12 NCAC l&B .0702 - Rule change will set out 

administration matters concerning the Basic 

Telecommunicator Course. 

12 NCAC lOB .1101 - .1104 - Rule changes will specif,- that 

only deputy sheriffs and detention officer are eligible to apply 

for a service award. 

12 NCAC lOB .1300 - Rule adoption will set out Minimum 

Standards of Training for Telecommunicators as follows. ■ 

1) .1301 - Purpose: 

2) .1302 - Basic Telecommunicator Course: 

3) .1303 - Time Requirement for Completion of Basic 
Telecommunicator Course: and 

4) . 1304 - Evaluation for Training Waiver. 

12 NCAC lOB .2002, .2101 - .2102, .2104 - .2105 - Rule 
changes will make in-senice Firearms Training and 
Requalification mandated only for deputy sheriffs and 
detention officers. Language, if left alone, would require all 
Justice Officers (which would include telecommunicators) to 
qualify annually. 

Comment Procedures: Please contact the agency contact 
person with an\ questions or comments concerning this 
information. 

Barbara D. Moore 

NC Sheriffs ' Education and Training Standards Commission 

Post Officer Drawer 629 

Raleigh, NC 27602 

(919) 716-6460 



establishes standards for owners and/or operators of 
hazardous waste facilities (treatment, storage or disposal 
facilities). ISA NCAC 13A .0110 - Interim Status Standards 
for Owners and Operators of Hazardous Waste Treatment, 
Storage and Disposal Facilities - Part 265 establishes interim 
status standards for owners and operators of hazardous waste 
treatment, storage and disposal facilities. 15A NCAC 13A 
.0111 - Standards for the Management of Specific Hazardous 
Wastes and Specific Types of Hazardous Waste Management 
Facilities. Establishes standards for the management of 
specific hazardous wastes and specific types of hazardous 
waste management facilities. 

Reason for Proposed Action: The proposed amendment 
redesignates Paragraph (z) "Appendices to Part 264" as 
Paragraph (aa) in 15A NCAC 13A .0109 Standards For 
O^vners /Operators of HWTSD Facilities - Part 264, and adds 
40 CFR 264.1200 through 264.1202 (Subpart EE), 
"Hazardous Waste Munitions and Explosives Storage", to 
Paragraph (z). The proposed amendment redesignates 
Paragraph (w) "Appendices to 40 CFR Part 265" as 
Paragraph (x) and adds 40 CFR 265.1200 through 265.1202 
(Subpart EE). Hazardous Waste Munitions and Explosives 
Storage", to 15A NCAC I3A .0110(w). The proposed 
amendment redesignates Paragraph (e) Appendices to 40 CFR 
Part 266 to (f) and adds 40 CFR 266.200 through 266.206 
(Subpart M). "Military Munitions" to I5A NCAC 13A 
.011 1(e): and a technical change in Paragraph (d) replaces 
266.122 with 266.112. 

Comment Procedures: Written comments may be submitted 
to Jimmy Carter, Chief. Hazardous Waste Section, Division 
of Waste Management. PO Box 29603, Raleigh. NC 27611- 
9603. b\ December 1. 1997. 



TITLE 15A - DEPARTMENT OF ENVIRONMENT, 
HEALTH, AND NATURAL RESOURCES 

CHAPTER 13 - SOLID WASTE MANAGEMENT 

J\Totice of Rule-making Proceedings is hereby given by the 
1 y Commission for Health Sen ices in accordance with G.S. 
150B-21.2. The agency shall subsequently publish in the 
Re gister the text of the rules it proposes to adopt as a result 
of this notice of rule-making proceedings and any comments 
received on this notice. 

Citation to Existing Rules Affected by this Rule-Making: 

15A NCAC 13A .0109 - .0111. Other rules may be proposed 
in the course of the rule-making process. 



TITLE 21 - OCCUPATIONAL LICENSING 
BOARDS 

CHAPTER 50 - BOARD OF EXAMINERS OF 

PLUMBING, HEATING AND 

FIRE SPRINKLER CONTRACTORS 

A Jotice of Rule-making Proceedings is hereby given by the 
1 y State Board of E.xaminers of Plumbing. Heating and Fire 
Sprinkler Contractors in accordance with G.S. 150B-21.2. 
The agency shall subsequently publish in the Register the text 
of the rules it proposes to adopt as a result of this notice of 
rule-making proceedings and any comments received on this 
notice. 



Authority for the rule-making: 

21.6 



G.S. 130A-294(c), 150B- 



Statement of the Subject Matter: 15A NCAC 13A .0109 - 
Standards for Owners and Operators of Hazardous Waste 
Treatment, Storage and Disposal Facilities - Part 264 



Citation to Existing Rules Affected by this Rule-Making: 

21 NCAC 50 .0106 - Location of Office. .0202 - Obtaining 
Forms, .0301 - Qualifications Determined by E.xamination, 
.0306 - Applications: Issuance of License, .0404 - Active 
Employment. .0405 - Multiple Licenses, .0506 - Minor 
Repairs and Alterations. .0510 - License Requirements 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



509 



RULE-MAKING PROCEEDINGS 



Generally. .0511 - Fuel Piping. .1102 License Fees, .1104 - 
Fees for Copies of Records and Returned Checks, .1201 - 
Petition for Rule-making Hearings, .1205 - Notice Mailing 
List, .1206 - Additional Information. .1210 - Written 
Submissions, .1212 - Statement of Reasons for Decision and 
.1302 - Submission of Request for Ruling. Other rules may 
be proposed in the course of the rule-making process. 

Authority for the rule-making: G.S. 87-16, 87-18, 87-21, 
87-21(a), 87-21(a)(5). 87-21(a)(6), 87-21(a)(l), 87-21(b), 
87-21 (c), 87-21 (g). 87-22, 87-26, 25-3-512. 150B-19 

Statement of the Subject Matter: To amend rules to 
provide licensure, examination and fees to be paid for fuel 
piping license as required by act of the 1997 General 
Assembly, to repeal a rule rendered obsolete by the 1997 
General Assembly with regard to mobile home connections, to 
charge a fee for returned checks, and to make editorial 
changes in other text not resulting in change of meaning or 
effect, and changes to show the new location of the Board 
offices. 

Reason for Proposed Action: Legislature enacted by 1997 
General Assembly in HE 408 and SB 996. 

Comment Procedures: Written comments may be submitted 
to the Board at 3801 Wake Forest Rd., Suite 201. Raleigh, 
NC 27609 on or before January 1, 1998. Public hearing will 
be held at the offices of the Board at 3801 Wake Forest Rd., 
Suite 201, Raleigh, NC, at 8:30 a.m., November 19, 1997. 
Speakers will be limited to 5 minutes each and must advise 
the Board office of their desire to speak by noon the previous 
dav. 



510 NORTH CAROLINA REGISTER October I, 1997 12:7 



PROPOSED RULES 



This Section contains the text of proposed rules. At least 60 days prior to the publication of text, the agency published a 
Notice of Rule-making Proceedings. The agency must accept comments on the proposed rule for at least 30 days from the 
publication date, or until the public hearing, or a later date if specified in the notice by the agency. The required comment 
period is 60 days for a rule that has a substantial economic impact of at least five million dollars ($5,000,000). Statutory 
reference: G.S. 1508-21. 2. _^ 



TITLE 10 - DEPARTMENT OF HUMAN 
RESOURCES 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Secretary of Human Resources intends to amend 
rules cited as 10 NCAC 14V . 7006. Notice of Rule-making 
Proceedings was published in the Register on July 1, 1997. 

Proposed Effective Date: July 1, 1998 

Instructions on How to Demand a Public Hearing: A 

demand for public hearing must be requested in writing 
within 15 days of this notice and addressed to Charlotte F. 
Hall, Division of MH/DD/SAS, 325 N. Salisbury Street, 
Albemarle Bldg., Raleigh. NC 27603-5906. 

Reason for Proposed Action: Tlie Court Order for 
assaultive and violent children contains general eligibility 
criteria for class membership . In order to comply with the 
specific operational criteria which were jointly agreed to by 
the parties in 1981, as a result of the Court Order, the 
number "nvo" should read "one" in Paragraph (b) of 10 
NCAC 14V. 7006. 

Comment Procedures: Please submit written comments to 
Charlotte F. Hall, Division of Mental Health, Developmental 
Disabilities and Substance Abuse Services (DMH/DD/SAS), 
325 N. Salisbury Street, Albemarle Bldg., Suite 558. Raleigh, 
NC 27603-5906, FAX 919-733-8259. Comments will be 
accepted through October 31, 1997. 

Fiscal Note: Tlus Rule does not affect the expenditures or 
revenues of state or local government funds. This Rule does 
not have a substantial economic impact of at least five million 
dollars ($5,000,000) in a 12-month period. 



(a) To meet the criterion of violent or assaultive behavior, 
there shall be evidence in the minor's recent history (within 
the 12 months prior to the application or request for re-review 
of eligibility) or current functioning of one or more of the 
following: 

(1) physically attacks, with or without weapons against 
other persons or animals, or physical attacks 
resulting in property damage; 

(2) physically self-injurious behavior or serious 
suicidal attempts; 

(3) threatened attacks with a deadly weapon; 

(4) firesetting; or 

(5) predatory sexual behaviors. 

(b) In addition, the behaviors shall meet two one or more 
of the following tests: 

(1) the attack shall be sufficiently severe that 
substantial harm to persons did result or could 
result without intervention; 

(2) the behavior shall have occurred with sufficient 
frequency to be considered a pattern of response 
(more than three times over a period of six 
months); 

(3) the behavior is extreme or out of proportion to the 
provocation, if any, or is not an age-appropriate 
reaction; 

(4) the behavior was sufficiently disruptive to lead to 
extrusion from or refusal for admittance to school, 
job, recreational setting, or treatment program; 

(5) the behavior resulted in severe measures of control, 
e.g., seclusion, restraints, or chemical controls; or 

(6) the behavior resulted in incarceration or 
institutionalization with the restrictive environment 
then "controlling" the behavior. 

Authority G.S. 122C-3; 122C-112; 122C-194. 



CHAPTER 14 - MENTAL HEALTH, 
GENERAL 

SUBCHAPTER 14V - RULES FOR MENTAL 

HEALTH, DEVELOPMENTAL DISABILITIES, 

AND SUBSTANCE ABUSE FACILITIES 

AND SERVICES 



Notice is hereby given in accordance with G.S. 150B-21.2 
ttiat the DHR - Division of Medical Assistance intends to 
amend rule cited as 10 NCAC 26H .0213. Notice of Rule- 
making Proceedings was published in the Register on 
December 16. 1996. 



SECTION .7000 - SERVICES FOR ELIGIBLE 

ASSAULTIVE AND VIOLENT CHILDREN 

AND ADOLESCENTS 

.7006 VIOLENT OR ASSAULTIVE BEHAVIOR 
DEFINED 



Proposed Effective Date: August 1. 1998 

A Public Hearing will be conducted at 1:30 p.m. on October 
16, 1997 at the Division of Medical Assistance, 1985 
UmsteadDr.. Kirby Bldg.. Room 132. Raleigh. NC. 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



511 



PROPOSED RULES 



Reason for Proposed Action: This action is proposed in 
order to authorize additional Disproportionate Share 
payments to hospitals that provide ser\'ices to clients of State 
Agencies meeting that agency's eligibility requirements. 

Comment Procedures: Written comments concerning these 
rule-making actions must be submitted by December 1. 1997 
to Portia Rochelle, APA Coordinator. Division of Medical 
Assistance, 1985 Umstead Drive, Raleigh, NC 27603. Oral 
comments may be presented at the hearing. A fiscal note 
statement is available upon written request from the same 
address. 

Fiscal Note: This Rule affects the expenditure or distribution 
of State funds. This Rule does not affect the expenditure or 
distribution of Local funds. This Rule does have a substantial 
economic impact of at least five million dollars ($5,000,000) 
in a 12 -month period. 

CHAPTER 26 - MEDICAL ASSISTANCE 

SUBCRAPTER 26H - RELMBURSEMENT 
FOR NURSING FACILITY SERVICES 

SECTION .0200 - HOSPITAL INPATIENT 
REIMBURSEMENT PLAN 

.0213 DISPROPORTIONATE SHARE 
HOSPITALS 

(a) Hospitals that serve a disproponionate share of 
low-income patients and have a Medicaid inpatient utilization 
rate of not less than one percent are eligible to receive rate 
adjustments. The cost report data and financial information 
that is required in order to qualify as a disproportionate share 
hospital effective April 1, 1991 is based on the fiscal year 
ending in 1989 for each hospital, as submitted to the Division 
of Medical Assistance on or before April 1, 1991. The cost 
report data and financial information to qualify as a 
disproponionate share hospital effective July 1, 1991 is based 
on the fiscal year ending in 1990 for each hospital, as 
submitted to the Division of Medical Assistance on or before 
September 1, 1991. In subsequent years, qualifications 
effective July 1 of any particular year are based on each 
hospital's fiscal \ear ending in the preceding calendar year. 
The patient days, costs, revenues, or charges related to 
nursing facility services, swing-bed services, home health 
services, outpatient services, or any other service that is not a 
hospital inpatient service cannot be used to qualify for 
disproportionate share status. A hospital is deemed to be a 
disproportionate share hospital if: 

(1) The hospital has at least two obstetricians with staff 
privileges at the hospital who have agreed to 
provide obstetric ser\'ices to individuals eligible for 
Medicaid. In the case of a hospital located in a 
rural area, the term obstetrician includes any 
physician with staff privileges at the hospital to 
perform non-emergency obstetric services as of 



December 21, 1987 or to a hospital that 
predominantly serves individuals under 18 years of 
age; and 

(2) The hospital's Medicaid inpatient utilization rate, / 
defined as the percentage resulting from dividing \ 
Medicaid patient days by total patient days, is at 
least one standard deviation above the mean 
Medicaid inpatient utilization rate for all hospitals 
that receive Medicaid payments in the state; or 

(3) The hospital's low income utilization rate exceeds 
25 percent. The low-income utilization rate is the 
sum of: 

(A) The ratio of the sum of Medicaid inpatient 
revenues plus cash subsidies received from 
the State and local governments, divided by 
the hospital's total patient revenues; and 

(B) The ratio of the hospital's gross inpatient 
charges for charity care less the cash 
subsidies for inpatient care received from the 
State and local governments divided by the 
hospital's total inpatient charges; or 

(4) The sum of the hospital's Medicaid revenues, bad 
debts allowance net of recoveries, and charity care 
e.xceeds 20 percent of gross patient revenues; or 

(5) The hospital, in ranking of hospitals in the State, 
from most to least in number of Medicaid patient 
days provided, is among the top group that 
accounts for 50 percent of the total Medicaid 
patient days provided by all hospitals in the State; 

or ( 

(6) It is a Psychiatric hospital operated by the North 
Carolina Department of Human Resources, 
Division of Mental Health, Developmental 
Disabilities, Substance Abuse Services 
(DMH/DD/SAS) or UNC Hospitals operated by 
the University of Nonh Carolina. 

(b) The rate adjustment for a disproportionate share 
hospital is 2.5 percent plus one fourth of one percent for each 
percentage point that a hospital's Medicaid inpatient 
utilization rate exceeds one standard deviation of the mean 
Medicaid inpatient utilization rate in the State. The rate 
adjustment is applied to a hospital's payment rate exclusive of 
any previous disproportionate share adjustments: 

(c) An additional one time payment for the 12-month 
period ending September 30, 1995, in an amount determined 
by the Director of the Division of Medical Assistance, may 
be paid to the Public hospitals that are the primary affiliated 
teaching hospitals for the University of North Carolina 
Medical Schools less payments made under authority of 
Paragraph (d) of this Rule. The payment limits of the Social 
Security Act, Title Xl.X, Section 1923(gj(l) applied to this 
payment require that when this payment is added to other 
Disproportionate Share Hospital payments, the additional 
disproponionate share payment will not exceed 100 percent 

of the total cost of providing inpatient and outpatient services / 
to Medicaid and uninsured patients less all payments received \ 
for services provided to Medicaid and uninsured patients. 



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} 



The total of all payments may not exceed the limits on DSH 
funding as set for the State by HCFA. 

(d) Effective July 1, 1994, hospitals eligible under 
Subparagraph (a)(6) of this Rule shall be eligible for 
disproportionate share payments, in addition to other 
payments made under the North Carolina Medicaid Hospital 
reimbursement methodology, from a disproponionate share 
pool under the circumstances specified in Subparagraphs (1), 
(2) and (3) of this Paragraph. 

(1) An eligible hospital will receive a monthly 
disproportionate share payment based on the 
monthly bed days of services to low income 
persons of each hospital divided by the total 
monthly bed days of services to low income 
persons of all hospitals items allocated funds. 

(2) This payment shall be in addition to the 
disproportionate share payments made in 
accordance with Subparagraphs (a)(r) through (5) 
of this Rule. However, DMH/DD/SAS operated 
hospitals are not required to qualify under the 
requirements of Subparagraphs (a)(1) through (5) of 
this Rule. 

(3) The amount of allocated funds shall be determined 
by the Director of the Division of Medical 
Assistance, but not to exceed the quarterly grant 
award of funds (plus appropriate non-federal 
match) earmarked for disproportionate share 
hospital payments less payments made under 
Subparagraphs (a)(1) through (5) divided by three. 
In Subparagraph (d)(1) of this Rule, bed days of 
services to low income persons is defined as the 
number of bed days provided to individuals that 
have been determined by the hospital as patients 
that do not possess the financial resources to pay 
portions or all charges associated with care 
provided. 

Low income persons include those persons that 
have been determined eligible for medical 
assistance. The count of bed days used to 
determine payment is based upon the month 
immediately prior to the month that payments are 
made. 

Disproportionate share payments to hospitals are 
limited in accordance with The Social Security Act 
as amended. Title XIX section 1923 (g), limit on 
amount of payment to hospitals. 

(e) Subject to the availability of funds, hospitals that: 
qualify as disproportionate share hospitals under 
Subparagraphs (a)(1) through (5) of this Rule for the fiscal 
years ended September 30, 1995 and September 30, 1996; 
operate Medicare approved graduate medical education 
programs for the fiscal years ended September 30, 1995 and 
September 30, 1996; and incur for the 12-month period 
ending September 30, 1996 unreimbursed costs (calculated 
without regard to payments under either this Paragraph or 
Paragraph (0 of this Rule) for providing inpatient and 
outpatient services to uninsured patients in an amount in 



excess of two million five hundred thousand dollars 
($2,500,000) shall be eligible for disproportionate share 
payments for such services from a disproportionate share pool 
under the circumstances specified in Subparagraphs (1) 
through (7) of this Paragraph. 

(1) Qualification for the 12 month period ending 
September 30, 1996 shall be based on cost report 
data and uninsured patient data certified to the 
Division by hospitals on or before September 23, 
1996 for fiscal years ending in 1995, in cormection 
with the disproportionate share hospital application 
process. Qualification for subsequent 12 month 
periods ending September 30 of each year shall be 
based on cost report data and uninsured patient data 
certified to the Division by hospitals on or before 
September 1 of each subsequent year, for the fiscal 
year ending in the preceding calendar year. 

(2) Any payments made pursuant to this Paragraph 
shall be calculated and paid no less frequently than 
annually, and prior to the calculation and payment 
of any disproportionate share payments pursuant to 
Paragraph (0 of this Rule. 

(3) For the 12 month period ending September 30, 
1996 a payment shall be made to each qualified 
hospital in an amount determined by the Director of 
the Division of Medical Assistance based on a 
percentage (not to exceed a maximum of 23 
percent) of the unreimbursed costs incurred by each 
qualified hospital for inpatient and outpatient 
services provided to uninsured patients. 

(4) In subsequent 12 month periods ending September 
30th of each year, the percentage payment shall be 
ascertained and established by the Division by 
ascertaining funds available for payments pursuant 
to this Paragraph divided by the total unreimbursed 
costs of all hospitals that qualify for payments 
under this Paragraph for providing inpatient and 
outpatient services to uninsured patients. 

(5) The payment limits of the Social Security Act, Title 
XIX, section 1923(g)(1) applied to the payments 
authorized by this Paragraph require that when this 
payment is added to other disproportionate share 
hospital payments, the total disproportionate share 
payments shall not exceed 100 percent of the total 
costs of providing inpatient and outpatient services 
to Medicaid and uninsured patients for the fiscal 
year in which such payments are made, less all 
payments received for services to Medicaid and 
uninsured patients. The total of all 
disproportionate share hospital payments shall not 
exceed the limits on disproportionate share hospital 
funding as established for this State by HCFA. 

(6) To ensure that payments pursuant to Paragraph (e) 
do not exceed the State aggregate upper limits to 
such payments established by applicable federal law 
and regulation (42 C.F.R. 447.272), such payments 
shall be cost settled within 12 months of receipt of 



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513 



PROPOSED RULES 



the completed cost repon covering the period for 

which such payments are made. If any hospital 

receives payments, pursuant to this Subparagraph in 

excess of the percentage established by the Director 

under Subparagraph (d)(3) of this Rule, ascertained 

without regard to other disproportionate share 

hospital payments that may have been received for 

services during the 12-month period ending 

September 30, 1996, such excess payments shall 

promptly be refunded to the Division. No 

additional payment shall be made to qualified 

hospitals in connection with the cost settlement. 

(7) The payments authorized by Subparagraph (6) shall 

be effective in accordance with G.S. 108A-55(c). 

(f) An additional one-time disproportionate share hospital 

payment during the 12-month period ending September 30, 

1996 (subject to the availability of funds and to the payment 

limits specified in this Paragraph) shall be paid to qualified 

public hospitals. For purposes of this Paragraph, a qualified 

public hospital is a hospital that qualifies for disproportionate 

share hospital status under Subparagraphs (a)(1) through (5) 

of this Rule; does not qualify for disproportionate share 

hospital status under Subparagraph (a)(6) of this Rule; was 

owned or operated by a State (or by an instrumentality or a 

unit of government within a State) throughout the 12-month 

period ending September 30,1996; verified its status as a 

public hospital by certifying state, local, hospital district or 

authority government control on the most recent version of 

Form HCFA-1514 filed with the Health Care Financing 

Administration, U.S. Department of Health and Human 

Services on or before September 23, 1996; files with the 

Division on or before September 23, 1996 by use of a form 

prescribed by the Division a certification of its unreimbursed 

charges for inpatient and outpatient services provided to 

uninsured patients during the fiscal year ending in 1995; and 

submits to the Division on or before September 23, 1996 by 

use of a form prescribed by the Division a certificate of 

public expenditures. 

(1) The payment to qualified public hospitals pursuant 
to this Paragraph for the 12-month period ending 
September 30, 1996 shall be based on and shall not 
exceed the unreimbursed charges certified to the 
Division by each such hospital by use of a form 
prescribed by the Division for inpatient and 
outpatient services provided to uninsured patients 
for the fiscal year ending in 1995, to be converted 
by the Division to unreimbursed cost by 
multiplying unreimbursed charges times the cost-to- 
charge ratio established by the Division for each 
hospital for the fiscal year ending in 1995. 
Payments authorized by this Paragraph shall be 
made no less frequently than armually. 

(2) Any payments pursuant to this Paragraph shall be 
ascertained and paid after any disproportionate 
share hospital payments that may have been or may 
be paid by the Division pursuant to Paragraph (d) 
of this Rule. 



(3) The payment limits of the Social Security Act, Title 
XIX, Section 1923 (g)(1) applied to this payment 
require that when this payment is added to other 
disproportionate share hospital payments, the total 
disproportionate share hospital payments will not 
exceed 100 percent of the total costs of providing 
inpatient and outpatient services to Medicaid and 
uninsured patients for the fiscal year in which such 
payments are made, less all payments received for 
services to Medicaid and uninsured patients for that 
year. The total of all DSH payments by the 
Division may not exceed the limits on 
disproportionate share hospital funding as 
established for this State by HCFA for the fiscal 
year in which such payments are made. 

(4) To ensure that estimated payments pursuant to 
Paragraph (0 do not exceed the State aggregate 
upper limits to such payments established by 
applicable federal law and regulation (42 C.F.R. 
447.272), such payments shall be cost settled 
within 12 months of receipt of the completed cost 
report covering the 12 month period for which such 
payments are made. No additional payments shall 
be made in connection with the cost settlement. 

(5) The payments authorized by Paragraph (f) of this 
Rule shall be effective in accordance with G.S. 
108A-55(c). 

(g) Effective with dates of payment beginning October 31. 
1996, hospitals that provide services to clients of State 
Agencies are considered to be a Disproportionate Share 
Hospital (DSH) when the following conditions are met: 

(1) The hospital has a Medicaid inpatient utilization 
rate not less than one percent and has met the 
requirements of Subparagraph (a)(1) of this Rule; 
and 

(2) The State Agency has entered into a Memorandum 
of Understanding (MOU) with the Division of 
Medical Assistance (Division); and 

(3) The inpatient and outpatient services are authorized 
by the State Agency for which the uninsured client 
meets the program requirements. 

(A) For purposes of this Paragraph, uninsured 
patients are those clients of the State Agency 
that have no third parties responsible for any 
hospital services authorized by the State 
Agency. 

(B) DSH payments are paid for services to 
qualified uninsured clients on the following 
basis: 

ii) For inpatient services the amount of 
the DSH payment is determined by the 
State Agencv iri accordance with the 
applicable Medicaid inpatient payment 
methodology as stated in Rule .021 1 
of this Section. 

(ii) For outpatient services the amount of 
the DSH payment is determined by the 



514 



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PROPOSED RULES 



State Agency in accordance with the 

applicable Medicaid outpatient 

payment methodology as stated in 

Section 24 of Chapter 18 of the 1996 

General Assembly of North Carolina. 

(iii) No federal funds are utilized as the 

non-federal share of authorized 

payments unless the federal funding is 

specifically authorized by the federal 

funding agency as eligible for use as 

the non-federal share of payments. 

(C) Based upon this subsection DSH payments as 

submitted by the State Agency are to be paid 

monthly in an amount to be reviewed and 

approved by the Division of Medical 

Assistance. The total of all payments may 

not exceed the limits on Disproportionate 

Share Hospital funding as set forth for the 

state by HCFA. 

Authority G.S. 108A-25(b); 108A-54; 108A-55: 42 C.F.R. 
447, Subpart C. 



TITLE ISA - DEPARTMENT OF ENVIRONMENT, 
HEALTH, AND NATURAL RESOURCES 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Environmental Management Commission 
intends to amend rule cited as 15A NCAC 2B .0315. Notice 
of Rule-making Proceedings was published in the Register on 
March 14, 1997. 

Proposed Effective Date: August I, 1998 

A Public Hearing will be conducted at 7:00 p.m. on October 
21, 1997 at the Archdale Building. Groundfloor Hearing 
Room, 512 North Salisbury Street, Raleigh, NC. 

Reason for Proposed Action: The NC Department of 
Environment, Health, and Natural Resources on behalf of the 
Environmental Management Commission (EMC) will conduct 
a public hearing in order to receive public comments on the 
proposed revision of the Critical Area and Protected Area 
boundaries surrounding the Falls Lake water supply 
reservoir. These rule-making proceedings are being held in 
accordance with G.S. 143-214.1, 143-215.1. and 143- 
215.3(a)(1). 

Falls Lake is the primary drinking water supply source for the 
City of Raleigh. The water supply is classified as WS-IV and 
encompasses parts of Durham, Franklin, Granville, and 
Wake Counties. In addition, the municipalities of 
Creedmoor, Durham, Raleigh, Butner. and Wake Forest have 
jurisdiction within the designated water supply area. Since 
this water supply is a WS-IV with an intake located in a 
reserwir. the Critical Area (CA) and Protected Area (PA) 
boundaries are based on the normal pool elevation of the 



reservoir. The minimum CA size is defined in the Water 
Supply Watershed Protection Rules as 'A mile and draining to 
the reservoir, as measured from the normal pool elevation. 
The rules define the PA as five miles and draining to the 
normal pool elevation of the reservoir. Any changes to the 
normal pool elevation change the CA and PA bouruiaries 
which will in turn affect the amount of land subject to the 
rules. 

Falls Lake was constructed as a multi-purpose reservoir by 
the U.S. Army Corps of Engineers in 1981, and started filling 
in 1983. One of the purposes was to provide water to the 
City of Raleigh with a guaranteed volume. However, due to 
a surveying error the actual storage capacity of the reservoir 
fell short of the contractual volume. The normal pool 
elevation was at 250.1 feet msl (mean sea level) at the 
completion of the reservoir. The United States Congress 
approved the Corps raising the dam approximately twelve 
inches in order to provide the agreed upon storage capacity 
for the City, and address water quality, flood control and 
sediment issues. Construction to raise the dam was 
completed in the fall of 1995. In changing the dam height, 
the normal pool elevation has risen to 251.5 feet msl. The 
result is a change in the Critical and Protected Areas 
surrounding the lake. Since the Schedule of Classifications 
for the Neuse River Basin (15A NCAC 2B .0315) references 
these areas, it is necessary to proceed to rulemaking in order 
to revise the outer boundaries of the CA and PA. The total 
affected area will increase from 173,156 acres to 187,741 
acres (includes lake surface area), which is a 6 percent 
increase. 

Each of the affected local governments would be required to 
modify' their water supply watershed protection ordinance and 
associated maps within 180 days following adoption and 
notification from the Environmental Management Commission 
of the change. 

Comment Procedures: The purpose of this announcement is 
to encourage those interested in this proposal to provide 
comments. You may either attend the public hearing and 
make relevant verbal comments or submit written comments, 
data or other relevant information by November 21, 1997. 
The Hearing Officer may limit the length of time that you may 
speak at the public hearing, if necessary, so that all those 
who wish to speak may have an opportunity to do so. We 
encourage you to submit written comments as well. 
The EMC is very interested in all comments pertaining to the 
proposed reclassification. It is very important that all 
interested and potentially affected persons or parties make 
their views known to the EMC whether in favor of or opposed 
to any and all provisions of the proposed reclassification. 
The EMC may not adopt a rule that differs substantially from 
the text of the proposed rule published in the North Carolina 
Register unless the EMC publishes the text of the proposed 
different rule and accepts comments on the new text (see 
150B-2 1.2(g)). All interested and potentially affected persons 
are strongly encouraged to read the entire announcement and 
supporting information, and make appropriate comments on 



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515 



PROPOSED RULES 



the proposal presented. The proposed effective date for the 
fuml niles pursuant to this hearing process is August 1. 1998. 
Written comments may be submitted by November 21, 1997 
to: 

Liz Kovasckitz 

DEHNR/Division of Water Quality 

PO Box 29535 

Raleigh, NC 27626-0535 

(919) 733-5083. extension 572 

In the case of inclement weather on the day the public 

hearing is scheduled, please contact the above telephone 

number for a recorded message on any changes to the 

location, day or time of the hearing. 

Fiscal Note: This Rule does affect the expenditures of local 
government funds. This Rule does not affect the expenditures 
of state government funds. This Rule does not have a 
substantial economic impact of at least five million dollars 
($5,000,000) in a 12-month period. 

CHAPTER 2 - ENVIRONMENTAL MANAGEMENT 

SUBCHAPTER 2B - SURFACE WATER 
AND WETLAND STANDARDS 

SECTION .0300 - ASSIGNMENT OF STREAM 
CLASSinCATIONS 

.0315 NEUSE RIVER BASIN 

(a) The schedule may be inspected at the following places: 

(1) Cleric of Court: 
Beaufort County 
Carteret County 
Craven County 
Durham County 
Franklin County 
Granville County 
Greene County 
Johnston County 
Jones County 
Lenoir County 
Nash County 
Orange County 
Pamlico County 
Person County 
Pitt County 
Wake County 
Wayne County 
Wilson County 

(2) North Carolina Department of Environment, 
Health, and Natural Resources: 

(A) Raleigh Regional Office 
3800 Barrett Drive 
Raleigh, North Carolina 

(B) Washington Regional Office 
1424 Carolina Avenue 
Washington, North Carolina 



(C) Wilmington Regional Office 
127 Cardinal Drive 
Wilmington, North Carolina. 

(b) The Neuse River Basin Schedule of Classification and 
Water Quality Standards was amended effective: 

(1) March 1, 1977; 

(2) December 13, 1979; 

(3) September 14, 1980; 

(4) August 9, 1981; 

(5) January 1, 1982; 

(6) April 1, 1982; 

(7) December 1, 1983; 

(8) January 1, 1985; 

(9) August 1, 1985; 

(10) February 1, 1986; 

(11) May 1, 1988; 

(12) July 1, 1988; 

(13) October 1, 1988; 

(14) January 1, 1990; 

(15) August 1, 1990; 

(16) December 1, 1990; 

(17) July 1, 1991; 

(18) August 3, 1992; 

(19) April 1, 1994; 

(20) July 1, 1996; 

(21) September 1, 1996; 

(22) April 1. -t99^ 1997; 

(23) August 1. 1998. 

(c) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin has been amended 
effective July 1. 1988 as follows: 

(1) Smith Creek [Index No. 27-23-(l)] from source to 
the dam at Wake Forest Reservoir has been 
reclassified from Class WS-lII to WS-I. 

(2) Little River [Index No. 27-57-(l)] from source to 
the N.C. Hwy. 97 Bridge near Zebulon including 
all tributaries has been reclassified from Class 
WS-111 to WS-1. 

(3) An unnamed tributary to Buffalo Creek just 
upstream of Robertson's Pond in Wake County 
from source to Buffalo Creek including Leo's Pond 
has been reclassified from Class C to B. 

(d) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin has been amended 
effective October 1, 1988 as follows: 

(1) Walnut Creek (Lake Johnson, Lake Raleigh) [Index 
No. 27-34-(l)]. Lake Johnson and Lake Raleigh 
have been reclassified from Class WS-III to Class 
WS-IIl & B. 

(2) Haw Creek (Camp Charles Lake) (Index No. 
27-86-3-7) from the backwaters of Camp Charles 
Lake to dam at Camp Charles Lake has been 
reclassified from Class C to Class B. 

(e) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin has been amended 
effective January 1, 1990 as follows: 

(1) Neuse-Southeast Pamlico Sound ORW Area which 



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PROPOSED RULES 



includes all waters within a line beginning at the 

southwest tip of Ocracoke Island, and extending 

north west along the Tar-Pamlico River Basin and 

Neuse River Basin boundary line to Lat. 35 degrees 

06' 30", thence in a southwest direction to Ship 

Point and all tributaries, were reclassified from 

Class SA NSW to Class SA NSW ORW, 

(2) Core Sound (Index No. 27-149) from northeastern 

limit of White Oak River Basin (a line from Hall 

Point to Drum Inlet) to Pamlico Sound and all 

, tributaries, except Thorofare, John Day Ditch were 

reclassified from Class SA NSW to Class SA NSW 

ORW. 

(0 The Schedule of Classifications and Water Quality 

Standards for the Neuse River Basin was amended effective 

December 1, 1990 with the reclassification of the following 

waters as described in (1) through (3) of this Paragraph. 

(1) Northwest Creek from its source to the Neuse River 
(Index No. 27-105) from Class SC Sw NSW to 
Class SB Sw NSW; 

(2) Upper Broad Creek [Index No. 27-106-(7)] from 
Pamlico County SR 1 103 at Lees Landing to the 
Neuse River from Class SC Sw NSW to Class SB 
Sw NSW; and 

(3) Goose Creek [Index No. 27- 107-( ID] from Wood 
Landing to the Neuse River from Class SC Sw 
NSW to Class SB Sw NSW. 

(g) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
July 1, 1991 with the reclassification of the Bay River [Index 
No. 27-I50-(l)] within a line running from Flea Point to the 
Hammock, east to a line running from Bell Point to Darby 
Point, including Harper Creek, Tempe Gut, Moore Creek and 
Newton Creek, and excluding that portion of the Bay River 
landward of a line running from Poorhouse Point to Darby 
Point from Classes SC Sw NSW and SC Sw NSW HQW to 
Class SA NSW. 

(h) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
August 3, 1992 with the reclassification of all water supply 
waters (waters with a primary classification of WS-I, WS-II 
or WS-III). These waters were reclassified to WS-I, WS-II, 
WS-III, WS-IV or WS-V as defined in the revised water 
supply protection rules, (15A NCAC 2B .0100, .0200 and 
.0300) which became effective on August 3, 1992. In some 
cases, streams with primary classifications other than WS 
were reclassified to a WS classification due to their proximity 
and linkage to water supply waters. In other cases, waters 
were reclassified from a WS classification to an alternate 
appropriate primary classification after being identified as 
downstream of a water supply intake or identified as not 
being used for water supply purposes. 

(i) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
April I, 1994 as follows: 

(1) Lake Crabtree [Index No. 27-33-(l)] was 
reclassified from Class C NSW to Class B NSW. 



(2) The Eno River from Orange County State Road 
1561 to Durham County State Road 1003 [Index 
No. 27-10-(16)] was reclassified from Class WS-IV 
NSW to Class WS-IV&B NSW. 

(3) Silver Lake (Index No. 27-43-5) was reclassified 
from Class WS-III NSW to Class WS-III&B NSW. 

(j) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
July 1, 1996 with the reclassification of Austin Creek [Index 
Nos. 27-23-3-(l) and 27-23-3-(2)] from its source to Smith 
Creek from classes WS-III NSW and WS-III NSW CA to 
class C NSW. 

(k) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
September 1, 1996 with the reclassification of an uimamed 
tributary to Haimah Creek (Tuckers Lake) [Index No. 27-52- 
6-0.5] from Class C NSW to Class B NSW. 

(1) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
April 1, 1997 with the reclassification of the Neuse River 
(including tributaries) from mouth of Marks Creek to a point 
1.3 miles downstream of Johnston County State Road 1908 to 
class WS-IV NSW and from a point 1.3 miles downstream of 
Johnston County State Road 1908 to the Johnston County 
Water Supply intake (located 1.8 miles downstream of 
Johnston County State Road 1908) to class WS-IV CA NSW 
[Index Nos. 27-(36) and 27-(38.5)]. 

(m) The Schedule of Classifications and Water Quality 
Standards for the Neuse River Basin was amended effective 
August 1^ 1998 with the revision of the Critical Area and 
Protected Area boundaries surrounding the Falls Lake water 
supply reservoir. The revisions to these boundaries is the 
result of the Corps of Engineers raising the lake's normal 
pool elevation. The result of these revisions is thg Critical 
and Protected Area boundaries (classifications) may extend 
further upstream than the current designations. 

Authority G.S. 143-21 4. 1; 143-215.1; 143-21 5. 3(a)(1). 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the North Carolina Wildlife Resources Commission 
intends to amend rules cited as ISA NCAC lOF .0311, .0333, 
and .0360. Notice of Rule-making Proceedings was 
published in the Register on July 1, 1997. 

Proposed Effective Date: July 1. 1998 

A Public Hearing will be conducted at 10:00 a.m. on 
October 16, 1997 at the Archdale Building, Wildlife 
Conference Room, 512 N. Salisbury Street, Raleigh, NC 

27604. 



Reason for Proposed Action: 

congested areas. 



To regulate boat speed in 



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517 



PROPOSED RULES 



Comment Procedures: Interested persons may present their 
\ie\\s either orally or in writing at the hearing. In addition, 
the record of hearing will be open for receipt of written 
comments from October I. 1997 through October 31. 1997. 
Such \\riiten comments must be delivered or mailed to \C 
Wildlife Resources Commission, 512 N. Salisbury Street. 
Raleigh. SC 27604-1188. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do 
not have a substantial economic impact of at least five million 
dollars iS5.000.000) in a 12-month period. 

CHAPTER 10 - WILDLIFE RESOLTICES 
AM) WATER SAFETY 

SL"BCHAPTER lOF -MOTORBOATS 
AND W ATER SAFETY 

SECTION .0300 - LOCAL WATER 
SAFETY REGLXATIONS 

.0311 GR.ANTILLE: \ ANCE AND WARREN 
COLTSTIES 

(a) Definitions. In addition to the definitions set fonh in 
Paragraph (b) of Rule .0301 of this Section, the following 
definitions shall apply in this Rule: 

(1) Corps. Corps of Engineers, United States Army; 

(2) Reser\'oir. John H. Kerr Resenoir in Granville, 
Vance and Warren Counties. 

(bi Speed Limit Near Ramps. No person shall operate a 
vessel at greater than no-wake speed within 50 yards of any 
concrete boat launching ramp located on the reservoir in said 
counties. 

(ci Speed Limit in Mooring Areas. No person shall 
operate a \essel at greater than no-wake speed while within a 
designated mooring area established by or with the approval 
of the Corps on the waters of the resen.'oir in said counties. 

(d) Restricted Swimming Areas. No person operating or 
responsible for the operation of a \essel shall permit it to 
enter an\ designated swimming area established by or with 
the approNal of the Corps on the v.aters of the resen.oir in 
said counties. 

(e) Speed Limit at Kimball Point. No person shall operate 
a vessel at greater than no-wake speed within 50 yards of the 
shoreline in the northernmost cove of the Kimball Point 
Recreation .Area in the reservoir, such recreation area being at 
the western end of SR 1204 in Warren Count>'. 

(f) Speed Limit at Lower Mill Creek. No person shall 
operate a vessel at greater than no-wake speed beginning at a 
point on the eastern side of Lower Mill Creek where it 
intersects the Nonh Carolina - Virginia state line, running 
across the creek with said state line and then running in a 
southerly direction on both the east and west sides of the 
creek to the head waters and including all waters of the creek 
south of the state line. 

ig) Speed Limit at Kerr Lake Methodist Campground. No 



person shall operate a vessel at greater than no-wake speed 
beginning 50 vards nonh and ending 50 vards east of the Kerr 
Lake .Methodist Campground. 

fg-> [hi Placement and Maintenance of Markers. The 
Corps IS designated a suitable agency for placement and 
maintenance of markers implementing this Rule. The 
perimeters of designated swimming areas must be marked 
with float lines which, in conjunction with the shoreline, 
form completeh' enclosed areas. In addition, supplementary 
standards as set fonh in Rule ,030 1(g)(2) to (7) and (9) of 
this Section shall apply. 

Authorm G.S 75 AS: 75A-I5. 

.0333 MECKLEN^LTiG .\ND GASTON 
COLTSTIES 

(a) Regulated Areas. This Rule applies only on that 
portion of the waters of Lake Wylie which lies withm the 
boundaries of Mecklenburg and Gaston Counties and to the 
restricted zones indicated b\- Paragraphs (bi, (c), <d), (e), (f), 
(g i and ( hi (g). (h), (ii. and ijj of this Rule on such waters. 

(b) Speed Limit Near Ramps. No person shall operate a 
N'essel at greater than no-wake speed within 50 >'ards of any 
public boat-launching ramp in .Mecklenburg County. 

(c) Speed Limit Near Piers. No person shall operate a 
\essel at greater than no-wake speed limit within 50 yards of 
an\ pier operated by Mecklenburg County for public use. 

(d) Speed Limit at McDowell Park. No person shall 
operate a %essel at greater than no-wake speed on the waters 
of the coves adjoining McDowell Park and the Southwest 
Nature Preserve in Mecklenburg County, including the 
entrances to the co\es on either side of Copperhead Island, 

(e) Speed Limit at Gaston Count\- Wildlife Club Cove, 
No person shall operate a vessel at greater than no-wake 
speed on the waters of the co\e at the Gaston County Wildlife 
Club on South Point Peninsula in Gaston County. 

(f) Speed Limit in Mooring .Areas. No person shall 
operate a vessel at greater than no-wake speed while within a 
marked mooring area established in Mecklenburg Count)' 
with the approval of the E.xecuti\e Director, or his 
representatne. 

(g) Restricted Swimming .Areas. No person operating a 
vessel shall permit it to enter an\' marked swimming area 
established in Mecklenburg County with the approval of the 
E.xecutive Director, or his represeniati\e. 

(h) Speed Limit Near Boating Facilities. No person shall 
operate a vessel at greater than no-wake speed within 50 
\ards of an>' boat launching ramp, dock, pier, marina, boat 
storage structure or boat senice area on that pan of Lake 
Wylie, including the South Fork Ri\er arm, which is located 
in Gaston Count\-. 

(i) No person shall operate a vessel at greater than no-wake 
speed within the area 250 feet to the nonh and 150 feet to the 
south of the Buster BoNd Bridge on Lake Wylie. 

UJ Speed Limit Near Highwav 27 Bridge. No person shall 
operate a vessel at greater than no-wake speed beginning 50 
N'ards nonh and extending 50 vards south of the outer two 



518 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



PROPOSED RULES 



overpasses near the Highway 27 Bridge at the Mount Holly 
Access Area on Lake Wylie. 



iji (kj Placement and Maintenance of Markers. The 
Boards of Commissioners of Mecklenburg County and Gaston 
County are designated suitable agencies for placement and 
maintenance of markers implementing this Rule, subject to 
the approval of the United States Coast Guard and the United 
States Army Corps of Engineers. With regard to marking the 
restricted zones indicated in this Rule, all of the 
supplementary standards listed in Rule .0301(g) of this 
Section shall apply. 

Authority G.S. 75A-3; 75A-15. 

.0360 GRAHAM COUNTY 

(a) Regulated Area. This rule applies to the waters and 
portions of waters described as follows: 

(1) Lake Santeetlah Boat Dock on Lake Santeeilah in 
Graham County; 

(2) Entrance of Fontana Boat Dock in Fontana Lake in 
Graham County; 

(3) Thomas Boat Dock on Fontana Lake in Graham 
County; 

(4) Crisp's Boat Dock, Panther Creek on Fontana Lake 
in Graham County. 

(b) Speed Limit. No person shall operate a vessel at 
greater than no-wake speed within 50 yards of the regulated 
areas as described in Paragraph (a) of this Rule. 

(c) Cheoah Point Swimming Area. Lake Santeetlah - No 
person shall operate a vessel within the Cheoah Point 
Swimming Area which begins at the head of Cheoah Point 
Cove and extends to the mouth of the Cove as designated by 
marker buovs and float lines. 

tc+ Id] Placement and Maintenance of Markers. The 
Graham County Board of Commissioners is designated as a 
suitable agency for the placement and maintenance of markers 
implementing this Rule. 

Authority G.S. 75A-3; 75A-15. 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Commission for Health Services intends to 
amend rules cited as ISA NCAC 18A .2301 - .2307 and adopt 
.2308 - .2310. Notice of Rule-making Proceedings was 
published in the Register on August 1, 1997. 

Proposed Effective Date: July 1, 1998 

A Public Hearing will be conducted at 1:00 p.m. on October 
29, 1997 at the Ground Floor Hearing Room, Archdale 
Building, 512 North Salisbury Street, Raleigh, NC. 

Reason for Proposed Action: To specify the types of 
authorization possible to be granted, the requirements for 
authorization, the processes for authorization, the 



requirements for training, the requirements for individuals 
who were once an agent and are desiring to be an agent 
again, the requirements to contract with other local health 
departments, the continuing education requirements, the 
reasons for denial, suspension, or revocation, reinstatement, 
and appeals procedures. 

Comment Procedures: Any person requiring information 
may contact Mr. Malcolm Blalock, PO Box 29596, Raleigh, 
NC 27626-0596. telephone (919) 715-0929, or e-mail at 
Malcolm_Blalock@mail.ehnr. state. nc. us. Comments will be 
received through October 31, 1997. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government funds. These Rules do 
not have a substantial economic impact of at least five million 
dollars ($5,000,000) in a 12-month period. 

CHAPTER 18 -ENVIRONMENTAL HEALTH 

SUBCHAPTER 18A - SANITATION 

SECTION .2300 - DELEGATION OF AUTHORITY 

TO ENFORCE COMMISSION FOR HEALTH 

SERVICES' SANITATION RULES 

.2301 SCOPE OF DELEGATED AUTHORITY 

No person shall act as an authorized agent of the state in 
enforcing the rules of the Commission for Health Services 
who is not a current employee of a local health department, 
registered with the North Carolina State Board of Sanitarian 
Examiners as a Registered Sanitarian or Sanitarian Intern and 
authorized pursuant to these Rules. There shall be th r ee 
seven areas of authorization to enforce the rules of the 
Commission for Health Se r vices' Services found in 
Subchapter 18A as follows: sanitation r ules: 

(1) autho r ity to enfo r ce food, lodging, and institutional 
sanitation, mig r ant housing, and public swimming 
pool — r ules. Food. Lodging, and Institution 
Sanitation including the following: 

(a) . 1000 Sanitation of Summer Camps. 

(b) .1300 Sanitation of Hospitals: Nursing and 
Rest Homes: Sanitariums. Sanitoriums; 
Educational and other Institutions. 
.1500 Sanitation of Local Confinement 



(c) 

mi 

lei 

m 

im 

m 



Facilities. 

.1600 Sanitation 



of Residential Care 



Facilities. 

.1800 Sanitation of Lodging Establishments. 

.2100 Rules Governing the Sanitation & 

Safetv of Migrant Housing. 

.2200 Sanitation of Bed and Breakfast 

Homes. 

.2400 Sanitation of Public. Private, and 

Religious Schools. 

.2600 Sanitation of Restaurants and Other 

Foodhandling Establishments. 



72:7 



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October I, 1997 



519 



PROPOSED RULES 



.2700 Sanitation of Meat Markets, and 
.3000 Bed and Breakfast Inns. 



(2) 



0] 

(ki 

autho r i t y t o enforce sewag e , mig r ant housing, and 

p ublic swimming pool rules, and 

On-Site Wastewater, including the following: 

(a) . 1900 Sewage Treatment and Disposal 

Systems. 
tbj .1603 and .1606. .1611(a) and (b) and .1613 

Sanitation of Residential Care Facilities 

(Family Foster Homes), and 

. 2 1 00 Rules Governing the Sanitation and 



isl 



Safety of Migrant Housing. 



(3) au t ho r i t y t o enfo r c e both (1) a n d (2) of this Rule. 
.2800 Sanitation of Child Day Care Facilities. 

(4) .3100 Lead Poisoning Prevention in Children 
Program. 

(5) .2500 Public Swimming Pools. 
t6j .3200 Tattooing. 

tZ) .1603. .1606. .161 1(a) and (b), .1613 Sanitation of 
Residential Care Facilities (Family Foster Homes) 
and .2100 Rules Governing the Sanitation and 
Safety of Migrant Housing. 

Authority G.S. 130A-4(b); 130A-5(3). 

.2302 ELIGIBILITY FOR DELEGATION OF 
AUTHORITY 

In o r de r fo r an individual to be eligible fo r delega t ion of 
Division of Envi r onmental Health autho r i t y, the individual 
mus t meet t he following c r ite r ia : 

(a) The applicant shall successfully complete a centralized 
training course approved by the Division. 

(b) The applicant shall successfully complete all required 
preliminary activities and field practice and review. 

(c) When the supervisor determines that the applicant has 
progressed sufficiently to work independently, the health 
director may request the applicant be evaluated for 
authorization. Documentation of the satisfactory condition of 
all preliminary activities and field practice, including any 
inspection or evaluation forms completed by the applicant and 
comments of the supervisor shall be foi^arded to the regional 
specialist. 

(d) IL. upon reviewing the file, the regional specialist finds 
that the applicant needs additional field practice, the 
evaluation for authorization may be postponed until that 
practice has been completed. 

(e) Upon satisfactory completion of the requirements in 
Paragraphs (a)-(d) of this Rule, the regional specialist shall 
coordinate the administration of a written test which the 
applicant must pass by a score of 70 percent or more. The 
test may be repeated if necessary. 

(f) An applicant onlv requesting authorization for 15A 
NCAC 18A .3100 Lead Poisoning Prevention in Children 
Program, in lieu of the requirements set out in Paragraphs 
(a)-(e) of this Rule, shall be required to take and successfully 
complete the North Carolina State of Practice course entitled 
"Lead Investigation and Abatement" and shall pass the 



written test provided by that course. 

(g) After the applicant has successfully completed the 
written test, the regional specialist shall conduct a field 
evaluation of the applicant's knowledge, skills, and ability to 
enforce the specific laws and rules of the Commission. 
Following the field evaluation, the regional specialist shall 
make a recommendation to the Director of the Division of 
Environmental Health. 

t+1 em p loyment by a local health de p a r tment. 

(2-) sa t isfacto r y com p leti o n of the o r ien t ation /initial 



field — t r aining — at — one — of — the- 
Envi r onmcntal 



ma 
Division — of 



H e al t h's 



r ecognized 



o r icn t ation/initial fi e ld t r a i ning cente r s, 

f¥) r egist r a t ion — by — the — State — Board of San it a r ian 

Examin er s as a sanitarian inte r n o r sanitarian, and 



(4 



) com p letion o f an o r ganized o r ienta t ion tor new 

em p loyees by t h e h e al t h de p a r tme nt which em p loys 
the individual. 



Authority G.S. 130A-4(b); 130A-5(3). 

.2303 DELEGATION OF AUTHORITY 

tsr) — U p on a r equest f r om the local h e alth de p a rt me nt and 
u p on — a — determination — that — the — individual — meets — the 
re qui re ments of Rule — .2302 of this Sec t ion, — the dis tr ic t 
sanitarian shall id e n t ify th e re s p onsibil i ti e s which have been 
assigned to the individual, detcnnine the appropria t e type of 
autho r ization, and wo r k individually with t he p e r son for a t 
least th r ee days. — Du r ing this p e r iod of evalua t ion, the dis tr ict 
sanita r ian will e xamine t he individual's : 

t+1 knowledge of a p pro pr iat e t e chnical mate r ial, r ules, 

and laws: 

(51 abili t y to a pp ly technical ma t e r ial, r ules, and laws 

a p prop r iately ; and 

tSi — ability to wo r k e ff e ctiv e ly with t he publ i c. 

thi — U p on a de t eimiiiation that the criteria in Paragra p h 
(a) have been met and that none of the r easons fo r denial 
l i sted in Rule .2305 of this Section exist, the Envi r onmental 
Health — Se r vices — Section — Chief shall — tssttc — delega t ion of 
autho r ity to enfo r ce a s p ecific a r ea of the mies. 

Upon determination that the criteria in Rule .2302 of this 
Section have been met and none of the reasons for denial 
listed in Rule .2308 of this Section exist, and upon a review 
of the recommendation of the regional specialist, the 
Director. Division of Environmental Health, shall rule on the 
request for authorization. An Identification Card shall be 
issued by the Division to each person authorized to enforce 
the rules of tlie Commission. The card shall be carried by the 
agent at all times when on duty. The card is the property of 
the Division and shall be returned to tlie Division upon 
separation of employment, suspension, or revocation of 
authorization or failure to maintain registration with the N.C. 
Board of Sanitarian Examiners. 



Authority G.S. 130A-4(b); 130A-5(3). 

.2304 SUBSEQUENT AUTHORIZATIONS 



520 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



PROPOSED RULES 



The — dist r ic t — sanitarian has autho r ity — t o evaluate — the 
pe.1 foi ' inaiKC of individuals who have been delegated authority 
t o enfo r ce Commission fo r Health Sei - viccs' sanitation r ules 
and to make recommendations to the Envi r onmental Health 
S e i ' vices Section Chief. 

The local health director shall request authorization for an 
individual who has been previously authorized. 

(1) An individual who has not been authorized in an 
area for a period of u^ to three years shall be 
required to receive training as determined by the 
regional specialist after a field evaluation of the 
agent's knowledge, skills, and ability to enforce the 
rules. 

(2) An individual who has not been authorized in an 
area for a period of three years to five years shall 
be required to meet all of the requirements which 
apply to new applicants, except that the individual 
shall not be required to attend the entire centralized 
training course, but shall, instead, attend only the 
portions of the centralized training course which 
are directly applicable to the area of authorization 
requested. 

(3) An individual who has not been authorized for a 
period longer than five years shall be required to 
meet all requirements which apply to new 
applicants. 

Authority G.S. 130A-4(b); 130A-5(3). 

.2305 CONCURRENT AUTHORIZATION IN 
MULTIPLE COUNTIES 

fa^ The environmental H e alth S er vices Section Chief 

may deny, sus p end, o r r evoke the delegation of autho r ity fo r 
any of the following : 

(4^ failu r e to sa t isfy the r equi r ements fo r delega t ion of 

autho r ity in Rul e s .2302 and .2303 of this S e ction; 



(2) f r aud, deceit, o r p e r ju r y 

autho r ity; 

t9j addiction to na r cotics; 

(4) — d r unkenness on duty; 



in obtaining delegation of 



t5) — def r auding the p ublic o r at t em p ting to do so; 

i€) incom p etency, dishonesty, or unprofcssionalism in 

p erfo r ming delegated duties; 

(?) inexcusable neglect of duty; 

(8) failu r e to pr o per ly interpret and enfo r ce laws, 

r ules, and p olicies; 
t9) the delegation of autho r ity is no longe r necessary 

due to a change in duties of the individual; o r 
tW) failu r e to maintain r egist r ation by the State Boa r d 

of Sanitarian Examine r s and em p loyment by a local 

health de p a r tment. 



fb) P r io r to 



^ 



sus p ension o r r evocation of delegation 
autho r ity, the Envi r onm e ntal Health Sei"viccs Section Chief 
may place the individual on pr obation fo r a p eriod not to 

exceed — two — yea r s. If the — individual — docs — not — show 

satisfacto r y im pr ovement in the areas given as r e asons for 
pr obation within the stated t ime pe r iod, th e Envi r onmental 



H e alth S e i ' vic e s Section Chief shall sus pe nd o r r evoke the 
delegation of autho r ity. 

The Division may allow an agent who is authorized in a 
local health department to contract with another local health 
department to provide services to that county. When a local 
health department contracts for such services, the contracting 
department shall provide a statement to the Department on 
progress made to employ an individual who may be 
considered for authorization. 

(1) A contract shall be created between the contracting 
local health department and ttie agent (contractor) 
to include at least the following provisions: 

(a) Names and addresses of each party. 

(b) Scope of work to be performed. 

£cj Require the original public records to remain 
in the local health department in which the 
work is performed. The public records shall 
be left at tfie local health department or with 
an individual employed by the local health 
department who shall be responsible for 
delivering said records to the local health 
department within two business days of the 
service provided. 

(d) Designate the party responsible for 
maintaining public records created by the 
agent. 

(e) Require the agent to be available for 
consultation to the public being served 
during usual business hours. 

(f) Require the agent to be available for any 
hearing or other legal proceeding which may 
ensue from activities conducted by 
the agent. 

(2) The agent shall maintain a list of each activity and 
the date performed for review in accordance with 
Items I3i and (4} of this Rule. 

(3) Each public record created by the contracting agent 
shall be reviewed, dated, and initialed by an 
authorized agent of a local health department or the 
regional specialist as provided by Item (4) of this 
Rule. In addition, at least 10 percent of the 
activities performed by the agent shall be reviewed 
on-site in the field by an authorized agent employed 
by the contracting local health department. The 
review shall be conducted each month and shall 
cover the previous month's activities conducted by 
the contracting agent. 

{4} if tlie contracting local health department has no 
authorized employee, the Division shall conduct a 
review of each public record created by the 
contracting agent. In addition, at least 10 percent 
of the activities performed by the agent shall be 
reviewed on-site in tfie field by the Division. The 
review shall be conducted each month and shall 
cover the previous month's activities conducted by 
the agent. 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



521 



PROPOSED RULES 



Authority G.S. 130A-4(b): 130A-5(3). 

.2306 CONTINUING EDUCATION 

If an individual's autho r ization has been sus p ended, the 



autho r ization will be r einstated u p on determination that the 
r easons fo r sus p ension no long er exist. — If an individual's 



autho r ization has be e n r evoked, an individual who has not 
history of f r aud o r deceit in the p ast five years may 
f i - ir r p-aiuhn ri ?at i r .n at>e r SIX months f r om the dale of 



had a 



a p ply fo r r e-autho r ization afte r six months f r om the date of 
r evocation by satisf> ' ing the re qui r ements of Rules .2302 and 
■ 2303 of this S e ction. 

(a) The requirements in this Rule shall apply lo all agents 
who are authorized pursuant to G.S. I30A-4(b) to enforce 
rules of the Commission, effective on January i of the year 
following the effective date of this Rule. Each agent shall 
receive the following contact hours of approved continuing 
education for each authorization held: 

Food. Lodging, and Institutional Sanitation. 



LU 



ill 



£3} 
14] 



including Migrant Housing and Family Foster 

Homes rules, at least 14 hours of continuing 

education over a three year period. 

On-Site Wastewater rules, including Migrant 

Housing and Family Foster Homes rules, at least 

12 hours of continuing education over a three year 

period. 

Child Day Care rules, at least eight hours of 



continuing education over a three vear period. 
Lead Poisoning Prevention in Children rules, at 
least six hours of continuing education over a three 
year period. 

(5) Public Swimming Pools rules, at least three hours 
of continuing education over a three year period. 

(6) Tattooing rules, at least 2 hours of continuing 
education over a three year period. 

(b) An agent who attends the North Carolina State of 
Practice Committee's workshops entitled "Environmental 
Health Law" or "Getting the Message Across" shall be given 
credit for meeting 50 percent of the requirements cited in 
Subparagraphs (a)(1) ; (6j of tliis Rule, not to exceed 100 
percent of tlie total credit given for attendance at the 
workshop. An agent may receive credit for viewing 
videotapes of workshops which have been professionally 
produced or created by the Department or for completing 
approved home-study courses. However, a maximum of 50 
percent of tlie required hours of continuing education may be 
obtained by videotapes or home-study courses. 

(c) An agent who is providing the training shall be given 
credit towards the continuing education requirements at a rate 
of two hours of credit for every hour of presentation for the 
initial presentation. Subsequent presentations of the same 
topic shall be given credit at a rate of one hour's credit for 
each hour of presentation. 

(1) An individual or organization desiring approval of 
a course or program shall apply for such approval 
by submitting to the Division of Environmental 
Health a copy of the course agenda, including a 
description of tlie topics to be discussed, the time 



frame of each presentation and the identity and 
qualifications of each presenter. 

(2) An applicant denied approval of a program may 
request reconsideration of such a decision by 
submitting a letter to the Director. Division of 
Environmental Health within 15 days of receipt of 
the notice of disapproval. The decision of the 
Director is final. 

(3) Educational programs offered by local health 
departments may be approved when the regional 
environmental health specialist is actively involved 
with the planning of the program and is a 
participant in tlie program. 

(4) The individual or organization conducting an 
approved course or program shall submit to the 
division a list of attendees, including the number of 
hours each attendee was present. The following 
information shall be included for each attendee: 

(a) Name. 

(b) Employing Agency. 

(c) Registered Sanitarian Number. 

(d) Number of hours of attendance. 

(5) The Division shall be responsible for maintaining 
records for each authorized individual's attendance 
at approved courses or programs. The division 
shall provide a report to each authorized individual 
at least annually. The report shall include the 
hours needed, the hours credit received and the 
hours necessary to meet the requirements of the 
rule for each authorization held. 

(6) The Division shall notify an authorized agent who 
has not met the requirements of these Rules that the 
agent's authorization will be suspended in 60 days 
unless the agent shows that all continuing education 
requirements have been met. If the authorized 
agent submits documentation of compliance with 
this Rule to the division within 60 days of the date 
of ihe notice, the Division shall review the 
documentation and determine whether the 
authorized agent has demonstrated compliance with 
this Rule. If the division determines that the 
authorized agent has not demonstrated compliance 
with the Rule within 60 days of the notice, the 
agent's authorization shall be suspended until 
compliance is shown. 

Authority G.S. 130A-4(b); 130A-5(3). 

.2307 EVALUATION 

A pp eals conce r ning the inte rpr etation and e nfo r c e m e nt of 
t he r ules in this Section shall be made in acco r dance with 
G.S. 150D. 



The regional specialist may, at any time, evaluate the 
performance of an authorized agent and recommend that the 
Director. Division of Environmental Health, take corrective 
action. 



522 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



PROPOSED RULES 



Authority G.S. 130A-4(b); 130A-5(3). 

.2308 DENIAL; SUSPENSION AND REVOCATION 

(a) The Director. Division of Environmental Health, may 
deny, suspend, or revoke the authorization to act as an agent 
of the State for any of the following: 

(1) failure to satisfy the requirements for authorization 
in Rules .2302 and .2303 of this Section: 

(2) fraud, deceit, dishonesty, or penury in obtaining 
authorization or rn performing authorized duties: 

(3) addiction to controlled substances: 

(4) drug or alcohol induced intoxication on duty: 

(5) defrauding the public or attempting to do so: 

(6) incompetency or unprofessionalism in performing 
authorized duties: 

(7) neglect of duty: or 

(8) failure to properly interpret and enforce laws, 
rules, and policies. 

(b) The Director. Division of Environmental Health may 
place ML individual on conditional status for a period not to 
exceed six months if the individual's failure to properly 
enforce laws, rules and policies may be corrected with 
additional education and oversight. The Director may 
suspend or revoke the authorization anytime during the 
conditional period if satisfactory progress is not made and the 
Director shall suspend or revoke the authorization after the 
conditional period if the individual does not demonstrate the 
necessary knowledge, skills and ability to warrant an 
unconditional authorization. 

Authority G.S. 130A-4(b): 130A-5(3). 

.2309 RE-AUTHORIZATION 

If an individual's authorization has been suspended, the 
authorization will be reinstated upon determination that the 
reasons for suspension no longer exist. If an agent's 
authorization has been revoked for failure to comply with the 
requirements found in Rule .2308(2) or (5) of this Section. 
the agent may apply for reinstatement five years after the 
revocation becomes effective. If an individual's authorization 
has been revoked for reasons other than those found in Rule 
.2308(2) or (5) of this Section, the agent may reapply for 
authorization after six months from the date the revocation 
becomes effective by satisfying the requirements of Rules 
.2302 and .2303 of this Section. The Department may refuse 
to reauthorize an individual if it is not satisfied that the 
reasons for revocation are unlikely to reoccur. 

Authority G.S. 130A-4(b); 130A-5(3). 

.2310 APPEALS PROCEDURES 

Appeals concerning denials, suspensions and revocations of 
authorization under these Rules shall be made in accordance 
with G.S. 150B. An individual whose authorization has been 
suspended or revoked and who timely requests an appeal may 
continue to work as an authorized agent until a final agency 
decision is made pursuant to G.S. 150B-36: however, all 



inspection forms and permits completed by the agent during 
that period must be countersigned by another authorized a gent 
who concurs with the findings and conclusions reflected on 
the inspection forms and permits. 

Authority G.S. 130A-4(b); 130A-5(3). 

Notice is hereby given in accordance with G.S. 1508-21. 2 
that the Commission for Health Services intends to 
amend rule cited as 15A NCAC 24A .0202. Notice of Rule- 
making Proceedings was published in the Register on July 1, 
1997. 

Proposed Effective Date: August 1, 1998 

A Public Hearing will be conducted at 1:00 p.m. on October 
29. 1997 at the Archdale Building, Ground Floor Hearing 
Room, 512 N. Salisbury St., Raleigh, NC. 

Reason for Proposed Action: The purpose of this 
rulemaking is to increase the income eligibility for inpatient 
care under the Sickle Cell Program to the same scale used for 
outpatient care. This action will establish consistent 
standard for determining eligibility for all levels of program 
funded care and will make inpatient care available to more 
low income clients. 

Comment Procedures: Comments may be submitted in 
writing within 60 days after the date of publication of this 
issue of the North Carolina Register to Richard Moore, 
Purchase of Medical Care Services, Office of the Controller, 
DEHNR, PO Box 29602, Raleigh, NC 27626. 

Fiscal Note: This Rule affects the expenditure or distribution 
of State funds subject to the Executive Budget Act, Article 1 of 
Chapter 143. This Rule does not affect the expenditures or 
revenues of local government funds. This Rule does not have 
a substantial economic impact of at least five million dollars 
($5,000,000) in a 12-month period. 

CHAPTER 24 - GENERAL PROCEDURES FOR 
PUBLIC HEALTH PROGRAMS 

SUBCHAPTER 24A - PAYMENT PROGRAMS 

SECTION .0200 - ELIGIBILITY DETERMINATIONS 

.0202 DETERMINATION OF FINANCIAL 
ELIGIBILITY 

(a) A patient must meet the financial eligibility 
requirements of this Subchapter to be eligible for benefits 
provided by the payment programs. Financial eligibility shall 
be determined through application of income scales. The 
definition of annual net income in Rule .0203 of this 
Subchapter and the definitions of family in Rule .0204 of this 



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523 



PROPOSED RULES 



Subchapter shall be used in applying the income scales, 
except as provided in Paragraphs tf> (ei and t^ UQ of this 
Rule. 

f-tr) — A p e r son shall be financially eligible for inpatient 
s e rvic e s under the Sickle C e ll Program if the net familv 



income is at o r b elo\v ' 
54.200: Familv Size 2 



b e low the foil 



owing scale : Family Size 1 : 
55.300: Familv Size 3: 5G.400: 



Family Size 4 : 57.500: Family Size 5 and ove r: add 5500 p e r 
family membe r . 

tct (M A person shall be financially eligible for out p atient 
services under the Sickle Cell Program if the net family 
income is at or below the federal poveny level in effect on 
July 1 of each fiscal year. 

{&i iei A person shall be financially eligible for the HIV 
Medications Program if the net family income is at or below 
125 percent of the federal poverty level in effect on Jul>' 1 of 
each fiscal year. 

fe-r idi A person shall be financially eligible for the 
Kidney Program if the net family income is at or below the 
following scale: Family Size 1: 56,400: Family Size 2: 
58,000: Family Size 3: 59,600; Family Size 4: 511.000: 
Family Size 5: 512,000: Family Size 6 and over: add 5800 
per family member. 

tft {e} A person shall be financially eligible for the Cancer 
Program if gross family income is at or below 1 15 percent of 
the federal poverty level in effect on July 1 of each year. 

tgl 111 A child shall be financially eligible for Children's 
Special Health Services if the child is approved for Medicaid 
when applying or reapphing for program coverage, except 
for children eligible under Paragraph rtr> tgi and fT> (h} of this 
Rule. 

(It) £g} A child approved for Children's Special Health 
Services post adoption coverage pursuant to 15 A NCAC 21F 
.0800, shall be eligible for services under Children's Special 
Health Sep.ices if the child's net income is at or below the 
federal poverty level in effect on July 1 of each year. 

(t) £h} Non-Medicaid eligible children covered by CSHS 
prior to January 1, 1996 who reapply for program co\'erage 
during 1996 shall be granted one additional year of eligibilit)- 
if their net family income is at or below the federal poveny 
level approved for program use at the time that they apply. 

fj^ (il A person shall be financially eligible for ser\'ices 
under the Adult Cystic Fibrosis Program if the net family 
income is at or below the federal poverty level in effect on 
July 1 of each year. 

tlO iU The financial eligibility requirements of this 
Subchapter shall not apph' to: 

(1) Migrant Health Program: 

(2) School Health Fund financial eligibility 
determinations performed by a local health 
department which has chosen to use the financial 
eligibility standards of the Department of Public 
Instruction's free lunch program: 

(3) Prenatal outpatient services sponsored through local 
health department delivery funds, 15A NCAC 21C 
.0200: or through Perinatal Program high risk 
materaitv clinic reimbursement funds, 15A NCAC 



21C .0300: 
(4) Diagnostic assessments for infants up to 12 months 
of age with sickle cell syndrome. 

(+t Iki Except as provided in Paragraphs (1) and (m) of 
this Rule, once an individual is determined financially 
eligible for payment program benefits, the individual shall 
remain financially eligible for a period of one year after the 
date of application for financial eligibility unless there is a 
change in the individual's family size pursuant to Rule .0204 
of this Subchapter or his family's financial resources or 
expenses during that period. If there is a change, financial 
eligibility for payment program benefits must be 
redetermined. Financial eligibility must be redetermined at 
least once a year. 

trrt^ ID For purposes of the Kidney Program and HI'V 
Medications Program, once an individual is determined to be 
financially eligible, if the application for financial eligibility 
was received by the Department in the fourth quarter of the 
fiscal year, the individual shall remain financially eligible for 
benefits until the end of the next fiscal year unless there is a 
change in the individual's family size pursuant to Rule .0204 
of this Subchapter or his family's financial resources or 
expenses during that period. 

trrt tm] Children eligible for Children's Special Health 
Services Program benefits under Paragraph (gt Ifi of this 
Rule are financially eligible for a service if they were 
Medicaid eligible on the date the requested service was 
initiated. 

ftr> £ni If the most current financial eligibility form on file 
with the Department shows that the patient was financially 
eligible on the date an Authorization Request for payment for 
drugs was received, the Authorization Request may be 
approved so long as the Authorization Request is received 
less than 30 days prior to the expiration of financial eligibility 
and the authorized service does not extend more than 30 days 
after the expiration of financial eligibility. 

Authority G.S. 130A-4.2: 130A-5(3); 130A-124; 130A-127; 
130A-129: 130A-205. 



TITLE 21 - OCCLTATIONAL LICENSING 
BOARDS 

CHAPTER 12 - LICENSING BOARD 
FOR GENTRAL CONTRACTORS 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the Licensing Board for General Contractors 
intends to amend rule cited as 21 NCAC 12 .0202. Notice of 
Rule-making Proceedings u'qj published in the Register on 
March 14, 1997. 

Proposed Effective Date: August 1. 1998 

A Public Hearing m;7/ be conducted at 10:00 a.m. on 
October 22. 1997 at the Engineering Graduate Research 



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Center, WW Main Campus Drive, Centennial Campus - 
North Carolina State University, Raleigh, NC. 

Reason for Proposed Action: To require all general 
contractors to be licensed under at least one of five 
classifications. 

Comment Procedures: Persons wishing to present oral 
data, views or arguments on a proposed rule or rule change 
may file a notice with the Board at least W days prior to the 
public hearing at which the person wishes to speak. 
Comments should be limited to W minutes. The Board's 
address is PO Box 17187, Raleigh, NC 27619. Written 
submission of comments or argument will be accepted at any 
time up to and until the close of the public hearing. 

Fiscal Note: This Rule does not affect the expenditures or 
revenues of state or local government funds. Tfiis Rule does 
not have a substantial economic impact of at least five million 
dollars ($5,000,000) in a 12-month period. 

SECTION .0200 - LICENSING REQUIREMENTS 

.0202 CLASSinCATION 

(a) A general contractor may must be certified in one of 
five classifications. These classifications are: 

(1) Building Contractor. This classification covers all 
types of building construction activity including but 
not limited to: commercial, industrial, institutional, 
and all types of residential building construction; 
covers parking decks: all site work, grading and 
paving of parking lots, driveways, sidewalks, curbs 
and gutters which are ancillary to the 
aforementioned types of construction; and covers 
the work done under the specialty classifications of 
S(Concrete Construction), S(Insulation), S(Interior 
Construction), S(Masonry Construction), 
S(Roofing), S(Metal Erection), and S(Swimming 
Pools). 

(2) Residential Contractor. This classification covers 
all types of construction activity pertaining to the 
construction of residential units which are required 
to conform to the residential building code adopted 
by the Building Code Council pursuant to G.S. 
143-138; covers all site work, driveways and 
sidewalks ancillary to the aforementioned 
construction; and covers the work done as part of 
such residential units under the specialty 
classifications of S(lnsulation), S(Masonry 
Construction), S(Roofing), and S(Swimming 
Pools). 

(3) Highway Contractor. This classification covers all 
types of highway construction activity including 
but not limited to: grading, paving of all types, 
installation of exterior artificial athletic surfaces, 
relocation of public and private utility lines 
ancillary to the principal project, bridge 



construction and repair, parking decks, sidewalks, 
curbs, gutters and storm drainage. Includes 
installation and erection of guard rails, fencing, 
signage and ancillary highway hardware; covers 
paving and grading of airport and airfield runways, 
taxiways, and aprons, including the installation of 
signage, runway lighting and marking; and covers 
work done under the specialty classifications of 
S(Boring and Tunneling), S(Concrete 

Construction), S(Marine Construction) and 
S(Railroad Construction). If the contractor limits 
his activity to grading and does no other work 
described herein, upon proper qualification the 
classification of H(Grading and Excavating) may be 
granted. 

(4) Public Utilities Contractor. This classification 
includes those whose operations are the 
performance of construction work on the 
subclassifications of facilities set forth in G.S. 87- 
10(3). The Board may issue a license to a public 
utilities contractor that is limited to any of the 
subclassifications set forth in G.S. 87-10(3) for 
which the contractor qualifies. Within appropriate 
subclassification, a public utilities contractor 
license covers work done under the specialty 
classifications of S(Boring and Tunneling), 
PU(Communications), PU(Fuel Distribution), 
PU(Electrical-Ahead of Point of Delivery), and 
S(Swimming Pools). 

(5) Specialty Contractor. This classification shall 
embrace that type of construction operation and 
performance of contract work outlined as follows: 

(A) H(Grading and Excavating). Covers the 
digging, moving and placing of materials 
forming the surface of the earth, excluding 
air and water, in such a manner that the cut, 
fill, excavation, grade, trench, backfill, or 
any similar operation can be executed with 
the use of hand and power tools and 
machines commonly used for these types of 
digging, moving and material placing. 
Covers work on earthen dams and the use of 
explosives used in connection with all or any 
part of the activities described in this 
Subparagraph. Also includes clearing and 
grubbing, and erosion control activities. 

(B) S(Boring and Tunneling). Covers the 
construction of underground or underwater 
passageways by digging or boring through 
and under the earth's surface including the 
bracing and compacting of such passageways 
to make them safe for the purpose intended. 
Includes preparation of the ground surfaces 
at points of ingress and egress. 

(C) PU(Communications). Covers the 
installation of the following: 

(i) All types of pole lines, and aerial and 



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525 



PROPOSED RULES 



underground distribution cable for 
telephone systems; 

(ii) Aerial and underground distribution 
cable for Cable TV and Master 
Antenna TV Systems capable of 
transmitting R.F. signals; 

(iii) Underground conduit and 

communication cable including fiber 
optic cable; and 

(iv) Microwave systems and towers, 
including foundations and excavations 
where required, when the microwave 
systems are being used for the purpose 
of transmitting R.F. signals, signals; 
and installation of PCS or cellular 
telephone towers and sites. 

(D) S(Concrete Construction). Covers the 
construction and installation of foundations, 
pre-cast silos and other concrete tanks or 
receptacles, prestressed components, and 
gunite applications, but excludes bridges, 
streets, sidewalks, curbs, gutters, driveways, 
parking lots and highways. 

(E) PU(Electrical-Ahead of Point of Delivery). 
Covers the construction, installation, 
alteration, maintenance or repair of an 
electrical wiring system, including sub- 
stations or components thereof, which is or 
is intended to be owned, operated and 
maintained by an electric power supplier, 
such as a public or private utility, a utility 
cooperative, or any other properly franchised 
electric power supplier, for the purpose of 
furnishing electrical services to one or more 
customers. 

(F) PU(Fuel Distribution). Covers the 
construction, installation, alteration, 
maintenance or repair of systems for 
distribution of petroleum fuels, petroleum 
distillates, natural gas, chemicals and slurries 
through pipeline from one station to another. 
Includes all excavating, trenching and 
backfilling in connection therewith. Covers 
the installation, replacement and removal of 
above ground and below ground fuel storage 
tanks. 

(G) PU(Water Lines and Sewer Lines). Covers 
construction work on water and sewer mains, 
water service lines, and house and building 
sewer lines as defined in the North Carolina 
State Building Code, and covers water 
storage tanks, lift stations, pumping stations, 
and appurtenances to water storage tanks, lift 
stations and pumping stations. Includes 
pavement patching, backfill and erosion 
control as part of such construction. 

(H) PU(Water Purification and Sewage 



Disposal). Covers the performance of 
construction work on water and wastewater 
treatment facilities and covers all site work, 
grading, and paving of parking lots, 
driveways, sidewalks, and curbs and gutters 
which are ancillary to such construction of 
water and wastev/ater treatment facilities. 
Covers the work done under the specialty 
classifications of S( Concrete Construction), 
S( Insulation), S(Interior Construction), 
S(Masonr>' Construction), S(Roofing), and 
S(Metal Erection) as part of such work on 
water and wastewater treatment facilities. 
(I) S(Insulation). Covers the installation, 
alteration or repair of materials classified as 
insulating media used for the non-mechanical 
control of temperatures in the construction of 
residential and commercial buildings. Does 
not include the insulation of mechanical 
equipment and ancillary lines and piping. 
(J) S( Interior Construction). Covers the 

installation of acoustical ceiling systems and 
panels; drywall partitions (load bearing and 
non-load bearing), lathing and plastering, 
flooring and finishing, interior recreational 
surfaces, window and door installation, and 
installation of fixtures, cabinets and 
millwork. Includes the removal of asbestos 
and replacement with non-toxic substances. 
(K) S( Marine Construction). Covers all marine 
construction and repair activities and all 
types of marine construction in deep-water 
installations and in harbors, inlets, sounds, 
bays, and charmels; covers dredging, 
construction and installation of pilings, 
piers, decks, slips, docks, and bulkheads. 
Does not include structures required on 
docks, slips and piers. 
(L) S( Masonry Construction). Covers the 
installation, with or without the use of 
mortar or adhesives, of the following: 
(i) Brick, concrete block, gypsum 
partition tile, pumice block or other 
lightweight and facsimile units and 
products common to the masonry 
industry; 
(ii) Installation of fire clay products and 

refractory construction; 
(iii) Installation of rough cut and dressed 
stone, marble panels and slate units, 
and installation of structural glazed 
tile or block, glass brick or block, and 
solar screen tile or block. 
(M) S(Railroad Construction). Covers the 
building, construction and repair of railroad 
lines including: 
(i) The clearing and filling of rights-of- 



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way; 
(ii) Shaping, compacting, setting and 

stabilizing of road beds; 
(iii) Setting ties, tie plates, rails, rail 
connectors, frogs, switch plates, 
switches, signal markers, retaining 
walls, dikes, fences and gates; and 
(iv) Construction and repair of tool sheds 
and platforms. 
(N) S(Roofing). Covers the installation and 
repair of roofs and decks on residential, 
commercial, industrial, and institutional 
structures requiring materials that form a 
water-tight and weather- resistant surface. 
The term "materials" shall be defined for 
purposes of this Subparagraph to include, 
among other things, cedar, cement, asbestos, 
clay tile and composition shingles, all types 
of metal coverings, wood shakes, single ply 
and built-up roofing, protective and 
reflective roof and deck coatings, sheet metal 
valleys, flashings, gravel stops, gutters and 
downspouts, and bituminous waterproofing. 
(O) S(MetaI Erection). Covers: 

(i) The field fabrication, erection, repair 

and alteration of architectural and 

structural shapes, plates, tubing, pipe 

and bars, not limited to steel or 

aluminum, that are or may be used as 

structural members for buildings, 

equipment and structure; and 

(ii) The layout, assembly and erection by 

welding, bolting or riveting such 

metal products as, but not limited to, 

curtain walls, tanks of all types, 

hoppers, structural members for 

buildings, towers, stairs, conveyor 

frames, cranes and crane runways, 

canopies, carports, guard rails, signs, 

steel scaffolding as a permanent 

structure, rigging, flagpoles, fences, 

steel and aluminum siding, stadium 

and arena seating, bleachers, and fire 

escapes. 

(P) S(Swimming Pools). Covers 

construction, service and repair of 

swimming pools. Includes: 

(i) Excavation and grading; 

(ii) Construction of concrete, gunite, 

plastic-type pools, pool decks, 

walkways, and tiling and coping; and 

(iii) Installation of all equipment including 

pumps, filters and chemical feeders. 

Does not include direct connections to 

a sanitary sewer system or to portable 

water lines, nor the grounding and 

bonding of any metal surfaces or the 



making of any electrical connections. 

(Q) S( Asbestos). This classification covers 

renovation or demolition activities involving 

the repair, maintenance, removal, isolation, 

encapsulation, or enclosure of Regulated 

Asbestos Containing Materials (RACM) for 

any commercial, industrial, or institutional 

building, whether public or private. It also 

covers all types of residential building 

construction involving RACM during 

renovation and/or demolition activities. 

(b) An applicant may be licensed in more than one 

classification of general contracting provided the applicant 

meets the qualifications for the classifications, which includes 

passing the examination for the classifications in question. 

The license granted to an applicant who meets the 

qualifications for all classifications will carry with it a 

designation of "unclassified." 

Authority G.S. 87-1; 87-10. 

CHAPTER 46 - BOARD OF PHARMACY 

Notice is hereby given in accordance with G.S. 150B-21.2 
that the North Carolina Board of Pharmacy intends to 
adopt rule cited as 21 NCAC 46 .1813; amend 21 NCAC 46 
.1601, .1603 - .1604. .1804, .1810. .2103. .2201, .2301. 
Notice of Rule-making Proceedings was published in the 
Register on August 1, 1997. 

Proposed Effective Date: August 1, 1998 

Public Hearings will be conducted at: 

9:00 a.m. 

October 22, 1997 

Campbell University 

Taylor Hall 

Trustee Room 

Buies Creek, NC 



fire 


9:30 a.m. 




December 17, 1997 


the 


Mountain Area Health Education Center 


all 


501 Biltmore Avenue 




Classroom 5 




Asheville, NC 


and 




and 


Reason for Proposed Action: 



21 NCAC 46 .1601 - to specify that no more than two 

unlicensed personnel who spend a majority of their time 

performing functions constituting dispensing shall be on duty 

in the pharmacy per pharmacist on duty. 

21 NCAC 46 .1603 - to specify when new permits are 

required. 

21 NCAC 46 .1604 - to specify when a permit can be 



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527 



PROPOSED RULES 



transferred. 

21 NCAC 46 .1804 - to require no alteration of prescription 

orders b\ a part\ outside the practitioner-pharmacist-patient 

relationship and to specify requirements for delivery of 

prescription orders to a patient off site. 

21 NCAC 46 .1810 - to specify compounding requirements. 

21 NCAC 46 .1813 - to specify requirements for 

electronically transferred prescription orders. 

21 NCAC 46 .2103 - to require a health care facility 

pharmacist to be a member of the Board and to change 

geographic representation areas from 5 to 4. 

21 NCAC 46 .2201 - to specify requirements for an Inactive 

pharmacist. 

21 NCAC 46 .2301 - to require the indication for the drug 

prescribed to be on the prescription order. 

Comment Procedures: Persons wishing to present oral 
data, views or arguments on a proposed rule or rule change, 
may file a notice with the Board at least 10 days prior to the 
public hearing at which the person wishes to speak. 
Comments should be limited to 10 minutes. Tfie Board's 
address is PO Box 459. Carrboro, NC 27510-0459. Written 
submission of comments or argument will be accepted at any 
time up to and including December 1 7, 1997. 

Fiscal Note: These Rules do not affect the expenditures or 
revenues of state or local government finds. These Rules do 
not have a substantial economic impact of at least five million 
dollars ($5,000,000) in a 12-month period. 

SECTION .1600 - LICENSES AND PERMITS 

.1601 PHARMACY PERMITS 

(a) Applications for pharmacy permits, whether original or 
renewal, shall be made upon forms provided by the Board. 
The Board shall not issue any original or annual renewal 
pharmacy permit until the Board is satisfied that: 

(1) The pharmacist-manager is sure that at all times 
adequate qualified personnel has been secured by 
the management of the store to properly render 
pharmaceutical service in the manner prescribed by 
law. 

(2) Any and all unlicensed cle r ks personnel have been 
instructed that they may r ender p hannac e utical 
se r vice perform functions constituting dispensing 
only as an aid to and under the immediate 
supervision of a registered pharmacist. No more 
than two unlicensed personnel who spend a 
majority of their time performing functions 
constituting dispensing shall be on duty in the 
pharmacy per pharmacist on duty. 

(3) The following minimum technical equipment is 
maintained: 

(A) Graduates. Capable of accurately measuring 
volumes from 1 ml to at least 500 ml; 

(B) Mortars and pestles: 

(i) one - glass; 



(ii) one — "Wedgwood"; 

(C) Stirring Rods. Two different sizes made of 
glass or rubber; 

(D) Ointment slab or suitable substitute; 

(E) Class A prescription or electronic balances 
and appropriate weights, suitable for all 
required weighings, at least one of which 
must be sensitive to six mg; 

(F) Suitable facilities for recording and filing 
prescriptions as required by G.S. 90-85.26; 

(G) Spatulas: 

(i) stainless steel, at least three assorted 

sizes; 
(ii) non-metallic, one of any size; 
(H) Useable Supplies. Equipped with safety 
closures where required: 
(i) prescription bottles, 1 to 32 fluid 

ounces; 
(ii) dropper bottles, Vi to 2 fluid ounces; 
(iii) assorted pill and tablet containers; 
(iv) empty capsules. No. 00 to No. 3; 
(v) powder papers; 
(vi) ointment jars, assorted; 
(vii) prescription labels; 
(viii) all appropriate auxiliary labels; 
(I) Heating apparatus; 
(J) Refrigerator; 
(K) Reference library, as follows: 

(i) the latest edition of the United States 
Pharmacopoeia (US?) and National 
Formulary and supplements thereto or 
a standard commentary thereon; 
(ii) a copy of the pharmacy laws of North 
Carolina, including the North Carolina 
Controlled Substances Act and the 
rules adopted pursuant thereto, and the 
North Carolina Pharmacy Practice Act 
and the rules of the Board; 
(iii) a copy of the Federal Controlled 
Substances Act and the regulations 
adopted pursuant thereto; 
(iv) a Schedule V controlled substances 
register (where these preparations are 
sold other than on prescriptions); 
(v) a medical dictionary; 
(vi) current editions of generally accepted 
reference books on the following 
subjects: 

(I) drug interactions, 
(II) clinical pharmacology, 

(III) USP Dispensing Information or 
its equivalent, and 

(IV) if IV admixture services are 
provided, a reference on 
Parenteral Incompatibilities. 

(4) The pharmacy is equipped with sanitary appliances 
including lavatorv facilities with hot and cold 



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PROPOSED RULES 



running water; is adequately lighted; and is kept in 
a clean, orderly, and sanitary condition. 
(5) All prescription medications are labeled in 
accordance with G.S. 106-134 and 106-134.1. 

(b) In addition to the requirements for issuance and 
renev/al of a pharmacy permit imposed by a statute and by 
other rules of the Board, a permit shall not be issued or 
renewed to any person to operate a pharmacy wherein the 
prescriptions of medical practitioners are compounded or 
dispensed and distributed when such distribution is effected 
by mail and the practitioner-pharmacist-patient relationship 
does not exist, until the Board is satisfied that: 

(1) The pharmacy maintains records of prescriptions 
compounded or dispensed and distributed in 
manner that is readily retrievable; 

(2) During the pharmacy's regular hours of operation 
but not less than six days per week, for a minimum 
of forty hours per week, a toll-free telephone 
service is provided to facilitate communication 
between patients and a pharmacist at the pharmacy 
who has access to the patient's records. This toll- 
free number must be disclosed on the label affixed 
to each container of dispensed drugs; 

(3) The pharmacy complies with all lawful orders, 
directions, and requests for information from the 
Boards of pharmacy of all states in which it is 
licensed and all states into which it distributes 
prescription drugs; 

(4) The pharmacy complies with all USP and FDA 
requirements regarding the storage, packaging, and 
shipping of prescription medications. The 
pharmacist-manager and all other pharmacists 
employed in the pharmacies permitted pursuant to 
this Paragraph shall be subject to all Federal and 
State statutes and regulations concerning the 
dispensing of prescription medications including, 
but not limited to, 21 NCAC 46.1801 and .1805 
and 21 CFR 1306.01, 1306.05, and 1306.21. 

(c) The Board shall not issue an original or renewal permit 
to any person to operate a drugstore or pharmacy as a 
department in or a part of any other business serving the 
general public (except hospitals, nursing homes, and similar 
institutions subject to the provisions of .0300 of this Chapter) 
unless such pharmacy facility: 

(1) is physically separated from such other business; 

(2) is separately identified to the public both as to 
name and any advertising; 

(3) completes all transactions relative to such pharmacy 
within the registered facility; and 

(4) meets the same requirements for registration as all 
other pharmacies. 

(d) Permits to operate pharmacies, whether original or 
renewal, shall be issued to the pharmacist-manager of such 
pharmacy pursuant to a joint application of the owner and 
pharmacist-manager for the conduct and management of said 
pharmacy. The issuance of said permit shall not be complete 
and the permit shall not be valid until it has been 



countersigned by the pharmacist-manager as represented in 
the application. The permit so issued is valid only so long as 
the pharmacist-manager to whom it was issued assumes the 
duties and responsibilities of pharmacist-manager. Permits 
may be reissued at any time to a successor pharmacist- 
manager pursuant to the proper amendment of the application 
for the permit. 

(e) Upon application, the Board may issue and renew 
separate permits for pharmacies operating at one location. 
Records for each permitted pharmacy must be maintained 
separately. Prior to issuance of an original permit, each 
pharmacy shall submit a plan to the Board that shall assure 
accountability for the actions of each pharmacy at the 
location. 

Authority G.S. 90-85.6; 90-85.21. 

. 1 603 WHEN PERMITS REQUIRED 

A new pharmacy, device, or medical equipment permit 
issued by the Boa r d is required for a new phaiinacy, location. 
a change to a successor business entity, or a change of more 
than 50 percent ownership interest in the enti t y which owns 
ilic pl ' iaunacy, permit holder or any parent corporation. 
except as provided in Rule .1604 of this Section. 

Authority G.S. 90-85.6; 90-85.21; 90-85.22. 

. 1 604 TRANSFER OF PERMITS ALLOWED 

(a) A valid pharmacy pharmacy, device, or medical 
equipment permit may be transferred and a new permit is not 
required in the following situations: 

( 1 ) where the change of ownership does not involve the 
acquisition of more than 50 percent interest in the 
entity which owns the pharmacy, permit holder or 
any parent corporation; or 

(2) the pharmacy permit holder is owned by a publicly- 
traded corporation which remains publicly-traded 
and maintains — ownership — of — the — pharmacy , 
continues to hold the permit; or 

(3) the p harmacy permit holder is owned — by a 
corporation which is a wholly-owned subsidiary of 
anothe r co rp o r ation subsidiary, and there is no any 
change in the p arent-subsidiary r elationshi p , the 
ownership of any parent corporation is due to the 
stock of such corporation being publicly-traded. 

(b) A permit which is involved in a pending disciplinary 
proceeding may not be surrendered, terminated, or 
transferred. 

Authority G.S. 90-85.6; 90-85.21; 90-85.22. 

SECTION .1800 - PRESCRIPTIONS 

.1804 PRESCRIPTION: RECEIVING AND 
DISPENSING 

(a) In order to assure that the practitioner-pharmacist- 
patient relationship exists and to promote the safe and secure 



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distribution of drugs and devices, prescription orders may be 
received for filling and refilling only by a pharmacist or a 
bona fide employee of the pharmacy. The pharmacist- 
manager of the pharmacy shall be ultimately responsible for 
the safe, lawful and secure receipt of prescription orders and 
delivery of prescription drugs. Notwithstanding the 
provisions of this rule, prescription drugs also may be 
delivered by mail in accordance with the provisions of Rule 
21 NCAC 46.1601(7). A party outside the practitioner- 
pharmacist-patient relationship may not cause or attempt to 
cause the alteration of a prescription order. 

(b) In order to promote the safe and secure distribution of 
drugs, devices, and medical equipment, prescription orders 
may be received for filling and refilling only by the person in 
charge of the facility holding the device and medical 
equipment permit or a bona fide employee of the facility. 
The person in charge shall be ultimately responsible for the 
safe, lawful and secure receipt of prescription orders and 
delivery of prescription drugs, devices, and medical 
equipment. 

£cj Prescription drugs, devices and medical equipment may 
be delivered off site to the patient under the following 
conditions: 

(1) Delivery shall be to a person at least eighteen years 
of age, either the patient or another person who 
resides with the patient or is responsible for care of 
the patient. 

(2) At the time of delivery', the permit holder shall 
provide the person accepting delivery' with a form 
to sign, which lists the prescription drugs, devices 
01 medical equipment delivered and certifies that 
the person accepting delivery meets the criteria 
described in this Rule. The form shall be 
maintained in the pharmacy for three years with the 
other records concerning the dispensing of the 
prescription drugs, devices or medical equipment 
and be readily retrievable. 

Authority- G.S. 90-85.6: 90-85.32. 

.1810 COMPOUNDING 

In accordance with G.S. 90-85.3(0 and (iL and G.S. 90- 
85.6(a). the Board has primary- lurisdiction over 
compounding occurring in locations holding a pharmacy 
permit, and such compounding shall comply with the 
following: 

( 1) based on the existence of a practitioner-pharmacisi- 
patient relationship and the presentation of a valid 
prescription, or in anticipation of prescription 
orders based on established prescribing patterns, a 
pharmacist may compound a drug product for an 
individual patient. A pharmacist also may 
compound a drug product prior to receiving a valid 
prescription based on a history of receiving valid 
prescriptions generated within an established 
practitioner-pharmacist -pat lent relationship. 

Compounded drug products shall not be offered to 



other entities for resale: however, practitioners may 
obtain compounded drug products to administer to 
patients within the scope of their professional 
practice: 

(2) compounding pharmacies and pharmacists may 
advertise or otherwise promote compounding 
services: however, they mav not solicit business by 
offering to compound specific drug products: 

(3) the pharmacist js responsible for all aspects of 
compounding: however, unlicensed personnel 
working under the supervision of the pharmacist 
ma>' assist in compounding: 

(4) drug substances used for compounding shall be 
USP or NF grade, or if unavailable, AR. CP, ACS, 
or FCC grade substances may be used. If none of 
the foregoing grades are available, then the 
pharmacist must establish the purity and safety of 
the ingredient prior to its use. Manufactured drug 
products used for ingredients must be labeled with 
a batch control number and a future expiration date: 

(5) equipment and utensils used for compounding shall 
not be reactive, additive or absorptive so that the 
safety, identity, strength, quality, and purity of the 
compounded drug product will not be adversely 
affected. All compounding equipment and utensils 
shall be cleaned and sanitized prior to use. A 
compounding pharmacy shall have written 
procedures and formulas for the compounding of 
drug products: 

(6) any excess compounded drug product retained by 
the pharmacy shall be labeled with a complete list 
of ingredients or reference to such information, the 
preparation date, and an expiration date based upon 
the pharmacist's professional judgment. The excess 
compounded drug product shall be stored under 
conditions to preserve its strength, quality and 
purity: 

(7) All locations holding a p harmacy permit where 

ing re di e nts — are routinely — com p ounded — for 

dis pe nsing, as d e fin e d in G,S. 9 0-85. 3(c) othe r 
than with the exception of the reconstitution of oral 
antibiotics, mus t the pharmacy shall maintain a log 
showing the name or initials of the person who 
compounded the ing r edients a drug product and the 
name or initials of the pharmacist who checked the 
compounded pr escri p tion d r ug, drug product: Such 
log shall be maintain e d for a p e r iod of three years. 

(8) the pharmacy shall maintain a recordkeeping system 
from which the date of purchase, supplie r, 
manufacturer, and lot number or other identifier of 
each ingredient can be determined for each 
compounded drug product dispensed. All 
pharmacy records resulting from compounding, 
including the compounding log, shall be readily 
retrievable and maintained in the pharmacy for a 
period of three years: 

(9) in addition to the requirements of ttm Section, the 



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(10) 



compounding of radio pharmaceutical drug 
products shall comply with Section .2700 of this 
Chapter: and 

in addition to the requirements of this Section, the 
compounding of sterile parenteral drug products 
shall comply with Section .2800 of this Chapter. 



Authority G.S. 90-85.6; 90-85.32. 

.1813 ELECTRO>aC TRANSMISSION OF 
PRESCRIPTION ORDERS 

(a) "Electronic transmission" means transmission of the 
exact visual image of a document by way of electronic 
equipment other than facsimile machine described in Rule 
.1807 of this Section. 

(b) All prescription drug orders communicated by way of 
electronic transmission shall: 

(1) be transmitted directly to a pharmacist in a 

pharmacy of the patient's choice with no 

intervening person haying access to the prescription 

dru g order: 
{2} identify the transmitter's phone number for verbal 

confirmation, the time and date of transmission. 

and the identity of the pharmacy intended to receive 

the transmission: 
(3) be transmitted by an authorized practitioner or his 

designated agent: and 
("4") be deemed the original prescription drug order. 

provided it meets all requirements of federal and 

state laws and regulations. 

(c) The prescribing practitioner may authorize his agent to 
electronically transmit a prescription drug order to a 
pharmacist in a pharmacy provided that the identity of the 
transmitting agent is included in the order. 

(d) The pharmacist shall exercise professional judgment 
regarding the accuracy, validity, and authenticity of ari 
electronically transmitted prescription drug order consistent 
with existing federal and state laws and regulations. 

(e) All equipment for receipt of prescription drug orders 
b y electronic transmission shall be maintained so as to ensure 
against unauthorized access. 

£jQ There shall be no additional charge to the patient 
because the prescription order was electronically transmitted. 

(g> Prescriptions may be transferred electronically if all the 
requirements of Rule .1806 of this Section are met. 

Authority G.S. 90-85.6; 90-85.32. 

SECTION .2100 - ELECTIONS 

.2103 GEOGRAPHIC REPRESENTATIONS 

(a) Four of tlie Pharniaci&t pharmacist members of the 
Board shall not practice in a Health Care Facility Pharmacy 
as defined in Rule .1317 of this Chapter and shall be elected 
from ftYc four geographic areas of the state. These ftrc four 
geographic areas are: 

(1) The Western District, consisting of Alexander, 



Alleghany, Ashe, Avery, Buncombe, Burke, 
Caldwell, Catawba, Cherokee, Clay, Cleveland, ' 
Davie. Gaston, Graham, Haywood, Henderson, 
Iredell. Jackson, Lincoln, Macon, Madison, 
McDowell, Mitchell, Polk, Rowan. Rutherford, 
Surry. Swain, Transylvania, Watauga, Wilkes, 
Yadkin and Yancey Counties; 
(5) — The — No r the r n — Dist r ict consisting of Alamance, 
Caswell, — Fo r syth, — Guilfo r d, — O r ange, — Pe r son, 
Rockingham, Stokes, Su rr y and Yadkin Counties; 
f3) {2} The Central District, consisting of Anson. 
Cabarrus, Chatham, Davidson, Davis, I r edell, Le e , 
Forsyth. Guilford. Mecklenburg, Montgomery, 

Moo r e, Randolph, Richmond, R o wan, 

Rockingham. Stanly Stanly. Stokes and Union 

Counties; 

(4) {3} The Northeastern District, consisting of Alamance. 

Bertie, Camden, Caswell. Chatham. Chowan, 

Currituck, Dare, Durham, Edgecombe, Franklin, 

Gates, Granville, Halifax, Hertford, Johnston. 

Hyde, Martin, Nash, Northampton, Orange. 

Pasquotank, Perquimans, Person. Tyrell, Vance, 

Wake, Warren, Washington and Wilson Counties; 

and 

i5j {4} The Southeastern District, consisting of Anson. 

Beaufort, Bladen, Brunswick, Carteret, Columbus, 

Craven, Cumberland, Duplin, Greene, Harnett, 

Hoke, Johnston. Jones, Lee. Lenoir, Moore. New 

Hanover, Onslow, Pamlico, Pender, Pitt, 

Richmond. Robeson, Sampson, Scotland and 

Wayne Counties. 

(b) The remaining pharmacist member of the Board shall 

practice in a Health Care Facility Pharmacy as defined in 

Rule .1317 of this Chapter and shall be nominated and elected 

without regard to geographic area. 

Authority G.S. 90-85.7. 

SECTION .2200 - CONTINUING 
EDUCATION 

.2201 HOURS: RECORDS: PROVIDERS: 

CORRESPONDENCE: RECIPROCITY 

(a) As a condition of license renewal, each practicing 
pharmacist holding an active license shall report on renewal 
forms the hours of continuing education obtamed during the 
preceding year. Annual accumulation of ten hours is 
considered satisfactory to meet the quantitative requirement of 
this Rule. 

(b) All records, reports of accredited hours and certificates 
of credit shall be kept at the pharmacist's regular place of 
practice for verification by inspectors during regular or other 
visits. The Board reserves the right to require submission of 
such documentation on a random basis. Pharmacists who do 
not practice regularly at one location shall produce such 
records within 24 hours of a request from Board authorized 
personnel. All records of hours and certificates of credit shall 



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PROPOSED RULES 



be preserved for at least three years. 

(c) All continuing education shall be obtained from a 
provider approved by the Board. In order to receive credit, 
continuing education courses should have the purpose of 
increasing the participant's professional competence and 
proficiency as a pharmacist. At least five hours of the 
continuing education credits must be obtained through contact 
programs in any calendar year. Contact programs are those 
programs in which there is an opportunity for live two-way 
communication between the presenter and attendee. 

(d) Continuing education shall not serve as a barrier to 
reciprocity; however all licensees by reciprocity must observe 
the continuing education standards specified in (a), (b) and (c) 
of this Rule within the first renewal period after licensure in 
this state. 

(e) Pharmacists who list their status as "Inactive" on the 
annual application for license renewal and who certify that 
they are no longer engaged in the practice of pharmacy are 
not required to obtain the continuing education hours required 
by this Rule. Pharmacists on inactive status are prohibited 
from practicing pharmacy in tfiis State. Should a pharmacist 
on inactive status uish to return to active status, then all 
continuing education hours for the period of inactive status 
must be obtained. A pharmacist who has been on inactive 
status for five or more years must appear before the Board 
and submit evidence that he can safely and properly practice 
pharmacy before he can be returned to active status. 

Authorin G.S. 90-85.6; 90-85.17; 90-85.18. 



SECTION .2300 - PRESCRIPTION 
INFORMATION AND RECORDS 

.2301 PRESCRIPTION: DRUG ORDER 
REQUIREMENTS 

(a) Prescription orders shall include, but not be limited to: 



(1) 
(2) 
(3) 



(4) 

(5) 

(6) 

(7) 
(8) 
£21 
(b) 



date of issuance; 
name and address of patient: 
name, address and telephone number of prescriber 
except that indication of the name of the prescriber 
is sufficient if a data file specified in (b) of this 
Rule is current and in effect; 
Drug Enforcement Agency (DEA) number of 
prescriber in the case of controlled substances; 
name, strength, dosage form and quantity of drug 
prescribed; 

refills if authorized or, in institutions, the stop 
date; 

route of administration of drug prescribed; and 
directions for ttscr use; and 
indication for drug prescribed. 
Information in Subparagraphs (a)(2), (a)(3), (a)(4). 



(a)(6) and (a)(7) may be stored in a readily retrievable data 
file specifically compiled for use in the pharmacy, which is 
not a commercial publication, in lieu of the requirements of 
the named Subparagraphs. 

Authority G.S. 90-85.6(a); 90-85.32; 90-106(h). 



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The Codifier of Rules has entered the following temporary rule(s) in the North Carolina Administrative Code. Pursuant to 
G.S. 150B-21.1(e), publication of a temporary nde in the North Carolina Register serves as a notice of rule-making 
proceedings unless this notice has been previously published by the agency. 



TITLE 16 - DEPARTMENT OF PUBLIC 
EDUCATION 



shall become a part of the a pplication and shall also become 
a permanent record of the Board. 



Rule-making Agency: 

School Administration 



NC Standards Board for Public History Note: 



Authority G.S. 1 15C-290.5 (a)(6), ■ 
Temporary Adoption Eff. January 1. 1998. 



Rule Citation: 16 NCAC 7.0201 - .0202, .0301 - .0303 

Effective Date: January 1, 1998 

Findings Reviewed and Approved by: Beecher R. Gray 

Authority for the rule-making: G.S. 115C-290.5(a)(6) 

Reason for Proposed Action: The purpose of this 
rulemaking is to establish procedures for the administration 
of an examination to be used in the licensing of principals as 
required by G.S. 115C-290.5(a). The intent of the new 
licensure examination is to identify persons eligible for 
licensure as public school administrators. A passing score on 
the Public School Administrator Exam, which is the School 
Leaders Licensure Assessment established by Educational 
Testing Services (ETS), will be a requirement for any 
individual seeking license as a principal effective January 1, 
1998. 

Comment Procedures: Comments, statements, and data and 
other information may be submitted in writing to Linda C. 
Stevens, Executive Director, NC Standards Board for Public 
School Administration, Room 324, Education Building, 301 
N. Wilmington St., Raleigh, NC 27601-2825. 

CHAPTER 7 - NORTH CAROLINA STANDARDS 
BOARD FOR PUBLIC SCHOOL ADMINISTRATION 

SECTION .0200 - EXAMINATION PROCEDURES 

.0201 APPLICATION FOR EXAMINATION OR 
REGISTRATION 

Application for admission to take the Public School 
Administrator Exam for the principalship must be made on 
forms supplied by the Board along with a non-refundable 
application fee of fifty dollars ($50.00) for the first 
a pplication. The applications are available upon request made 
in person or b^ writing to the Board. Applicants must also 
supply the Board with a statement from the approved 
Institution of Higher Education (IHE) where preparation was 
completed that the individual has satisfied the educational 
requirements of G.S. 115C-290. 7(a)(3). An application 
process must be begun and the proper application fee received 
in the Board office 60 days prior to the exam. All data 
received by the Board in connection with the application 



.0202 WRITTEN EXAMINATION 

(a) The North Carolina Public School Administrator Exam 
for the principalship shall be the School Leaders Assessment 
established by Educational Testing Services (ETS). The fee 
for the exam shall be established and collected by ETS. 

(b) Three written exams shall be held in locations 
throughout the state during a calendar year. 

(c) The Board shall set the passing score for the exam. 
The Exam shall be graded in accordance with the methods 
and procedures established by ETS. Applicants may retake 
the examination at subsequent scheduled administrations. 

History Note: Authority G. S. 1 15C-290. 5 (a) (6); 

Temporary Adoption Eff. January 1. 1998. 

SECTION .0300 - RULE MAKING PROCEDURES 

.0301 RULE-MAKING PETITIONS 

A person may petition the Board to adopt a new rule or 
change or amend an existing rule by sending a rule-making 
petition to the Board at the Board's address. The petition 
must be titled "Petition for Rule Making" and must include 
the following information: the name and address of the 
person submitting the petition: a citation to any rule for 
which a change or repeal is requested: a draft of any proposed 
rule or amended rule: an explanation of why the new rule, 
amendment or repeal is requested and the effects of the new 
rule, amendment, or repeal on tlie Board's procedure or the 
persons regulated by the Board: any other information the 
person submitting the petition considers relevant. The Board 
must decide whether to grant or deny a petition for rule- 
making within 120 days of receiving the petition. In making 
its decision, the Board will consider the information 
submitted with the petition and any other relevant 
information. 

History Note: Authority G.S. 115C-290.5(a)(6): 150B-4; 
Temporary Adoption Eff. January 1. 1998. 

.0302 NOTICE MAILING LIST 

Any persons desiring to be placed on the mailing list for 
Board rule-making notices may file such request in writing, 
furnishing their names and mailing addresses to tlie Board. 
The letter of request shall state those subject areas within the 
authority of tlie Board for which the person wants notice. 
The Board may require reasonable postage and stationery, and 



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533 



TEMPORARY RULES 



duplicating cost to be paid by persons receiving such notice. 

History Note: Aiithonn G.S. 1 15C-290. 5(a)(6): 150B-4: 
Temporan Adoption Eff. Januan' L. 1998. 

.0303 PROCEDURE FOR DECLARATORY 
RULING 

(a) The Board shall decide whether to grant or deny a 
request to make a declaratory ruling on the validity of a rule 
or on the applicability of particular facts of a statute or to a 
rule or order of the Board within 60 days of receiving the 
petition. The Board may refuse to grant a petition for a 
declaratory ruling when there has been a similar factual 
determination in a contested case or one is likely to be made 
in a pending contested case or investigation. 

(b) The Board will presume that its current rules are valid 
unless this presumption is rebutted by persuasive evidence as 
offered in the petition for the declaratory ruling. When the 
Board determmes that a rule is invalid, the board shall initiate 
rule-making proceedings and send written notice of the 
proceeding to l]ie person who submitted the request. 

Histon,- Note: Authority G.S. 115C-290. 5(a)(6): 150B-4; 
Temporary Adoption Eff. January L. 1998. 



TITLE 18 - SECRETARY OF STATE 

Rule-making Agency: Department of Secretary of State 

Rule Citation: 18 NCAC 6 .1104. .1205 - .1206. .1211 - 
.1212. .1304. .1401. .1410 - .1412. .1506. .1509, .1702 - 
.1706. .171 2 -.17 14. .1801 -.1806. .1809. .1811 

Effective Date: October 1. 1997 

Findings Reviewed by Julian Mann: Approved 

Authority for the rule-making: G.S. 78.A-17(9): 78A- 
17(17): 78A-31(a): 78A-31(b): 78A-36(a): 78A-37(a): 78.4- 
37(b): 78A-37(d): 78A-38(b): 78A-38(c>: 78A-49(a): 78A- 
49(b): 78A-50: 78C-16(b): 78C-16(d): 78C-17(a): 78C- 
17(al): 78C-17(b): 78C-I7(bl): 78C-17(e): 78C-18(d): 78C- 
19(a): 78C-30(a): 78C-30(b): 78C-30(c>: 78C-30(d): 78C-31: 
78C-46(b) 

Reason for Proposed Action: Senate Bill 438 and Senate 
Bill 439 both necessitate the adoption of the proposed rules. 
These mo bills become effective on October 1. 1997. after 
which the existing rules will be inconsistent with the new 
laws. Adoption of temporary rules is necessary due to the 
short amount of time berween enactment of the new 
legislation and the effective date of the new laws. 

Comment Procedures: Persons who wish to make written or 
verbal comment regarding these proposed amendments, 
adoptions and repeals should contact: Mr. David Masse}-. 



Deputy Securities Administrator. NC Secretary of State. 300 
N. Salisbur\- Street. Raleigh. NC 27603-5909. Telephone 
(919)733-3924. Fax (919)821-0818. 

CHAPTER 6 - SECURITIES DIVISION 

SECTION .1100 - GENERAL PROVISIONS 

.1104 DEFINITIONS 

(a) "Act" shall mean the North Carolina Securities Act, 
Chapter 78A of the North Carolina General Statutes, as same 
has been or may be from time to time amended. 

(b) "Commercial Paper," as referred to in G.S. 
78A-16(10), shall mean any note, draft, bill of exchange or 
bankers acceptance which arises out of a current transaction 
or the proceeds of which have been or are to be used for 
current transactions, and which has a maturity at the time of 
issuance not exceeding nine months, exclusive of days of 
grace, or any renewal thereof, the maturity of which is 
likewise limited or any guarantee of such paper or of any 
such renewal. Commercial paper shall also exemplify the 
following characteristics: 

(1) prime quality negotiable paper of a type not 
ordinarily purchased by the general public; 

(2) issued to facilitate well recognized types of current 
operational business requirements; and 

(3) of a type eligible for discounting by Federal 
Reserve Banks. 

(c) "Direct Participation Program" shall mean a program 
which provides for flow-through tax consequences regardless 
of the structure of the legal entity or vehicle for distribution 
including, but not limited to, oil and gas programs, real estate 
programs, agricultural programs, cattle programs, 
condominium securities, and all other programs of a similar 
nature, regardless of the industry represented by the program, 
or any combination thereof. A program may be composed of 
one or more legal entities or programs but when used herein 
and in any rules or regulations adopted pursuant hereto the 
term shall mean each of the separate entities or programs 
making up the overall program and/or the overall program 
itself. Excluded from this definition are Subchapter S 
corporate offerings, real estate investment trusts, tax qualified 
pension and profit sharing plans pursuant to Sections 401 and 
403 (a) of the Internal Revenue Code and individual 
retirement plans under Section 408 of that Code, and any 
company registered pursuant to the Investment Company Act 
of 1940. 

(d) "SEC" shall mean the Securities and Exchange 
Commission. 

(e) "NASD" shall mean the National Association of 
Securities Dealers, Inc. 

(0 "NASAA" shall mean the North American Securities 
Administrators Association, Inc. 

(g) "CRD" shall mean the Central Registration 
Depository. 

(h) "Investment Contract" as used in G.S. 78A-2(11) 
includes: 



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(1) Any investment in a common enterprise with the 
expectation of profit to be derived through the 
essential managerial efforts of someone other than 
the investor. In this Subparagraph a "common 
enterprise" means an enterprise in which the 
fortunes of the investor are interwoven with and 
dependent upon the efforts and success of those 
seeking the investment or of a third party; and 

(2) Any investment by which an offeree furnishes 
initial value to an offeror, and a portion of this 
initial value is subjected to the risks of the 
enterprise, and the furnishing of this initial value is 
induced by the offeror's promises or 
representations which give rise to a reasonable 
understanding that a valuable benefit of some kind 
over and above the initial value will accrue to the 
offeree as a result of the operation of the enterprise, 
and the offeree does not receive the right to 
exercise practical and actual control over the 
managerial decisions of the enterprise. 

(i) "Recognized Securities Manual" shall mean a 
publication which contains the information required by G.S. 
78A-17(2)a. and which has been designated, by rule or by 
order, as a "recognized securities manual" by the 
administrator. 

m "Form D" is defined as the document adopted b^ the 
Securities and Exchange Commission, in effect on September 
1^ 1996 and as may be amended by the SEC from time to 
time, entitled "FORM D: Notice of Sale of Securities 
pursuant to Regulation D. Section 4(6). and/or Uniform 
Limited Offering Exemption. " including Part E and the 
A ppendix. 

History Note: Authority G.S. 78A-49(a); 

Eff. April 1. 1981: 

Amended Eff. September 1, 1990: October 1, 1988; January 

1. 1984: 

Temporary Amendment Eff. October 1. 1997. 

SECTION .1200 - EXEMPTIONS 

.1205 LIMITED OFFERINGS PURSUANT TO 
G.S. 78A-17(9) 

(a) Any issuer relying upon the exemption provided by 
G.S. 78A-17(9) in connection with an offering of a security 
made in reliance upon Rule 505 o r Rul e 506 of Regulation D 
promulgated by the Securities and Exchange Commission 
under the Securities Act of 1933, as amended, 17 C.F.R. 
230.505 (1982) and 17 C.r.R. 230.506 (1 9 82) (and as 
subsequently amended) shall comply with the provisions of 
Rules .1206, .1207 and .1208 of this Section; provided that 
such compliance shall not be required if the security is 
offered and sold only to persons who will be actively 
engaged, on a regular basis, in the management of the issuer's 
business; and provided further, that compliance with 
provisions of Paragraphs (a), (b), and (c) of Rule .1208 of 
this Section shall not be required if the security is offered to 



not more than five individuals who reside in this State. 

(b) Any issuer relying upon the exemption provided by 
G.S. 78A-17(9) in connection with an offering of a direct 
participation program security made solely in reliance upon 
an exemption from registration contained in Section 4(2) or 
Section 3(a)(l 1) of the Securities Act of 1933, as amended, or 
made solely in reliance upon Rule 504 of Regulation D 
promulgated by the Securities and Exchange Commission 
under the Securities Act of 1933, as amended, 17 C.F.R. 
230.504 (1982), (and as subsequently amended), shall comply 
with the following conditions and limitations: 

(1) No commission, discount, finder's fee or other 
similar remuneration or compensation shall be paid, 
directly or indirectly, to any person for soliciting 
any prospective purchaser of the security sold to a 
resident of this State unless such person is either 
registered pursuant to G.S. 78A-36 or exempt from 
registration thereunder or the issuer reasonably 
believes that such person is so registered or exempt 
therefrom. 

(2) In all sales of direct participation program 
securities, the provisions of Rule .1313 of this 
Chapter regarding registered offerings of direct 
participation program securities shall be applicable. 

(3) Any prospectus or disclosure document used in 
offering the securities in this state shall disclose 
conspicuously the legend(s) required by the 
provisions of Rule . 1 3 1 6 of this Chapter. 

(4) Not less than 10 business days prior to any sale of 
the securities to a resident of this State which shall 
include but not be limited to the receipt by the 
issuer, or any person acting on the issuer's behalf 
of a signed subscription agreement of, or the 
receipt of consideration from, a purchaser, the 
issuer shall file with the administrator, or cause to 
be so filed: 

(A) A statement signed by the issuer and 

acknowledged before a notary public or other 

similar officer: 

(i) identifying the issuer (including name, 
form of organization, address and 
telephone number); 

(ii) identifying the person(s) who will be 
selling the securities in this State (and 
in the case of such persons other than 
the issuer and its officers, partners and 
employees, describing their 

relationship with the issuer in 
connection with the transaction and 
the basis of their compliance with or 
exemption from the requirements of 
G.S. 78A-36) and describing any 
commissions, discounts, fees or other 
remuneration or compensation to be 
paid to such persons; 

(iii) containing a summary of the proposed 
offering including: 



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535 



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(I) a description of the securities to 

be sold; 
(II) the name(s) of all general 
partners of an issuer which is a 
partnership and, with respect to 
a corporate issuer or any 
corporate general partner(s) of 
any issuer which is a 
partnership, the date and place 
of incorporation and the names 
of the directors and executive 
officers of such corporation(s): 

(III) the anticipated aggregate dollar 
amount of the offering; 

(IV) the anticipated required 
minimum investment, if any, 
by each purchaser of the 
securities to be offered; 

(V) a brief description of the 
issuer's business and the 
anticipated use of the proceeds 
of the offering; and 
(VI) a list of the states in which the 
securities are proposed to be 
sold; 
(iv) containing an undertaking to furnish 
to the administrator, upon written 
request, evidence of compliance with 
Subparagraphs (1), (2), and (3) of this 
Paragraph (b); and 
(v) containing an undertaking to furnish 
to the administrator, upon written 
request, a copy of any written 
document or materials used or 
proposed to be used in connection 
with the offer and sale of the 
securities. 

(B) A consent to service of process naming the 
North Carolina Secretary of State as service 
agent using the Uniform Consent to Service 
of Process (Form U-2) signed by the issuer 
and acknowledged before a notary public or 
other similar officer; and accompanied by a 
properly executed Corporate Resolution 
(Form U-2A), if applicable; 

(C) A non-refundable filing fee in the amount of 
twenty-five dollars (S25.00), payable to the 
North Carolina Secretary of State. 

(5) Compliance with the provisions of Subparagraph 

(4) of this Rule shall not be required if the security 

is offered to not more than five individuals who 

reside in this State. 

(c) Neither the issuer nor any person acting on the issuer's 

behalf shall offer, offer to sell, offer for sale or sell the 

securities claimed to be exempt under G.S. 78A-17(9) by any 

means or any form of general solicitation or general 

advertising. 



(d) The administrator may, by order, waive any condition 
of or limitation upon the availability of the exemption 
provided by G.S. 78A-17(9). 

History Note: Filed as a Temporary Rule Eff. October 1, 

1983, for a Period of 120 Days to expire on January 29, 

1984: 

Authority G.S. 78A-17(9): 78A-49(a): 

Eff. January 1. 1984; 

Amended Eff. October 1, 1988; 

Temporary Amendment Eff. October 1. 1997. 

.1206 LIMITED OFFERING EXEMPTION 
PURSUANT TO G.S. 78A-17(17) 
(a) Transactions made in reliance upon Rule 505 o r Rule 
506 of Regulation D promulgated by the Securities and 
Exchange Commission under the Securities Act of 1933, as 
amended, 17 C.F.R. 230.505 (1982) and 17 C.T.R. 230.506 
(1 9 82) (and as subsequently amended), including any offer or 
sale made exempt by application of Rule 508(a), as made 
effective in Release No. 33-6389 and as amended in Release 
Nos. 33-6437, 33-6663, 33-6758, and 33-6825, shall be 
exempt from the requirements of G.S. 78A-24, provided 
there is compliance with the conditions and limitations of this 
Rule . 1 206 and Rules . 1 207 and . 1 208 of this Section. 

(1) No exemption under this Rule .1206 is available 
for the offer or sale of securities if the issuer or any 
other person or entity to which Rule .1206 applies 
is disqualified pursuant to Rule .1207 of this 
Section unless the administrator, upon application 
and a showing of good cause by the issuer, or such 
other person or entity, modifies or waives the 
disqualification. 

(2) No commission, discount, finder's fee or other 
similar remuneration or compensation shall be paid, 
directly or indirectly, to any person for soliciting 
any prospective purchaser of any security sold to a 
resident of this State in reliance upon the exemption 
provided by this Rule .1206 unless such person is 
either registered pursuant to G.S. 78A-36 or 
exempt from registration thereunder or the issuer 
reasonably believes that such person is so registered 
or exempt therefrom. 

(3) In all sales to those accredited investors defined in 
17 C.F.R. 230.501(a)(5) who reside in this State 
(except sales to such accredited investors made by 
or through a dealer registered under G.S. 78A-36) 
and in all sales to nonaccredited investors who 
reside in this State the issuer and any person acting 
on its behalf shall have reasonable grounds to 
believe and after making reasonable inquiry shall 
believe that one of the following conditions is 
satisfied: 

(A) The investment is suitable for the purchaser 
upon the basis of the facts, if any, disclosed 
by the purchaser as to his/her other security 
holdings and as to his/her financial situation 



536 



NORTH CAROLINA REGISTER 



October I, 1997 



12:7 



TEMPORARY RULES 



and needs. For the puqDose of this condition 
only, it may be presumed that if the 
investment does not exceed 10 percent of the 
investor's net worth, it is suitable. 
(B) The purchaser, either alone or with his/her 
purchaser representative(s), has such 
knowledge and experience in financial and 
business matters that he/she is or they are 
capable of evaluating the merits and risks of 
the prospective investments. 

(4) In all sales of direct participation programs 
securities pursuant to the exemption provided by 
this Rule .1206, the provisions of Rule .1313 of 
this Chapter regarding registered offerings of direct 
participation program securities shall be applicable 
in addition to all other requirements of this Rule 
.1206. 

(5) Any prospectus or disclosure document used in this 
state in cormection with an offer and sale of 
securities made in reliance upon the exemption 
provided by this Rule .1206 shall disclose 
conspicuously the legend(s) required by the 
provisions of Rule .1316 of this Chapter. 

(6) Nothing in the exemption provided by this Rule 
.1206 is intended to or should be construed as in 
any way relieving the issuer or any person acting 
on behalf of the issuer from providing disclosure to 
prospective investors adequate to satisfy the 
antifraud provisions of the Act. 

(7) Transactions which are exempt under this Rule may 
not be combined with offers and sales exempt under 
any other rule or section of this Act; however, 
nothing in this limitation shall act as an election. 
Should for any reason, an offer and sale of 
securities made in reliance upon the exemption 
provided by this Rule .1206 fail to comply with all 
of the conditions hereof, the issuer may claim the 
availability of any other applicable exemption. 

(8) A failure to comply with a term, condition or 
requirement of Subparagraphs (a)(2) and (a)(3) of 
this Rule will not result in loss of the exemption 
from the requirements of G.S. 78A-24 for any offer 
or sale to a particular individual or entity if the 
person relying on the exemption shows; 

(A) the failure to comply did not pertain to a 
term, condition or requirement directly 
intended to protect that particular individual 
or entity; and 

(B) the failure to comply was insignificant with 
respect to the offering as a whole; and 

(C) a good faith and reasonable attempt was 
made to comply with all applicable terms, 
conditions and requirements of 
Subparagraphs (a)(2) and (a)(3). 

Where an exemption is established only through reliance upon 
this Subparagraph (8) of this Rule, the failure to comply shall 
nonetheless be actionable by the administrator under G.S. 



78A-47. 

(9) In any proceeding involving this Rule .1206, the 
burden of proving the exemption or an exception 
from a definition or condition is upon the person 
claiming it. 

(10) In view of the objective of this Rule .1206 and the 
purpose and policies underlying the Act, this 
exemption is not available to any issuer with 
respect to any transaction which, although in 
technical compliance with this Rule .1206, is part 
of a plan or scheme to evade registration or the 
conditions or limitations explicitly stated in this 
Rule .1206 or Rules .1207 and .1208 of this 
Section. 

(11) The administrator may, by order, waive any 
condition of or limitation upon the availability of 
the exemption provided by this Rule .1206. 

(12) The exemption provided by this Rule . 1206 shall be 
known and may be cited as the "North Carolina 
Limited Offering Exemption." 

(b) Pursuant to G.S. 78A-18, the administrator may by 
order deny or revoke the exemption provided by this Rule 
.1206 with respect to a specific security or security 
transaction. 

History Note: Filed as a Temporary Rule Ejf. October 1, 

1983, for a Period of 120 Days to Expire on January 29, 

1984; 

Authority G.S. 78A-17(17): 78A-49(a); 

Eff. January 1, 1984; 

Amended Eff. September 1, 1990; October 1. 1988; 

Temporary Amendment Eff. October 1 . 1997. 

.1211 NOTICE HLING PROCEDURES FOR 
RU1.E 506 OFFERINGS 

An issuer offering a security that is a "covered security" 
under Section 18(b)(4)tD) of the Securities Act of 1933 shall 
file a notice on SEC Form P. a consent to service of process 
on a form prescribed by the Administrator, and pay a fee of 
seventy-five dollars ($75.00) no later than 15 days after the 
first sale in this State of such security covered under federal 
law. 

History Note: Authority G.S. 78A-31(b); 78A-49(a); 
Temporary Adoption Eff October 1. 1997. 

.1212 NOTICE nLING PROCEDURES FOR 

OFFERINGS OF INVESTMENT COMPANY 
SECURITIES 

(a) An investment company offering securities covered 
under Section 18(b)(2) of die Securities Act of 1933 mav 
satisfy the notice filing requirement of G.S. 78A-31(a) by 
filing the fees required by that section, together with Form 
NF. Uniform Investment Company Notice Filing. This filing 
need not be made nor fees paid on any security issued by an 
investment company if such security is exempt pursuant to the 
provisions of G.S. 78A-16 or 78A-17. If permitted by the 



72; 7 



NORTH CAROLINA REGISTER 



October 1, 1997 



537 



TEMPORARY RULES 



Securities Division. Form NF may be filed electronically. 

(b) By filing Form NF. an inyestment company thereby 
agrees that, upon receipt of a request from the Securities 
Division, the investment company will promptly provide to 
the Division a copy of us current prospectus and statement of 
additional information, if any, as filed with the Securities and 
Exchange Commission. 

(c) By executing the Form NF. the investment company 
thereby agrees, that for purposes of complying with the laws 
of this State, such execution shall be deemed to be the consent 
of the investment company to have the Administrator 
irrevocably appointed as us agent in this State upon whom 
may be ser\'ed any notice, process or pleading in any action 
or proceeding against it arising out oL or in connection with, 
the sale of securities covered by such Form NF or arising out 
of ilie violation of tlie securities laws of this State: and that 
any action or proceeding against the investment company may 
be cominenced in any court of competent jurisdiction and 
proper venue within this State by service of process upon the 
Administrator with the same effect as if the investment 
company was organized or created under the laws of this State 
and had been served lawfully with process in tjiis State. In 
the event any notice, process or pleading is served on the 
investment company through the Administrator, the 
Administrator shall promptly provide a copy of such notice, 
process, or pleading to ti\e person indicated ijn Item 5 of Form 
NF. 

(d) Upon filing Form NF and paving either the minimum 
or maximum fees required by G.S. 78A-31(a)(l). the 
securities of the investment company may be offered for sale 
and sold into, from, and within this State until the expiration 
of die notice filing period pursuant to G.S. 78A-31(a)(4). In 
order to offer or sell lis securities after the expiration of its 
notice filing, the investment company must extend its notice 
filing as provided in Paragraph (f) of this Rule. In the event 
that the Securities Division requests that the investment 
company provide u with a copy of the investment company's 
prospectus or statement of additional information, such 
request shall not restrict the ability of tlie investment 
company to offer its securities for sale in this State provided 
that the Division has received the Form NF and fees as 
required by G.S. 78A-31(a). 

(e) Any investment company that elects to gay a fee less 
than the maximum fee as provided in G.S. 78A-31(a) shall 
file a sales report on Form NF. with the Division, within two 
months after the expiration of tlie notice filing period. 

(f) A notice filing may be renewed by tlie investment 
company by filing a current Form NF and paying such fees as 
are required by G.S. 78A-31(a) within two months after the 
expiration of the prior notice filing period. Each renewal of a 
notice filing shall expire on December 31. 

(g) Amendments to tlie information contained on a Form 
NF may be made by the filing of another Form NF. together 
with the fees required by G.S. 78A-31(a). 

History Mote: Authorit\' G.S. 78A-31(a): 78A-49(a); 
Temporal Adoption Eff. October I. 1997. 



SECTION .1300 - REGISTRATION OF SECURITIES 

.1304 SECURITIES REGISTRATION AND 
nLING FEES 

(a) All fees (registration and filing) are payable to the 
Office of the Secretary of State and shall be submitted with 
the application for original, renewal, or additional 
registration. The registration fee shall be retained by the 
administrator, except where the registration is not granted by 
the administrator or where the registration is withdrawn at the 
request of the applicant and with the consent of the 
administrator. The filing fee shall be retained by the 
administrator in all cases. 

(b) The aggregate offering amount of an original or 
amended registration may be increased prior to or after the 
effectiveness of the registration by providing the 
administrator the following: 

(1) An additional registration filing fee of fifty dollars 
(S50.00) if such filing occurs after the effective 
date of the offering; 

(2) The appropriate registration fee calculated in the 
manner specified in G.S. 78A-28(b), provided the 
maximum registration fee has not been paid: and 

(3) An amendment to the Uniform Application to 
Register Securities (Form U-1). 

Additional registrations shall be effective when the 
administrator so orders. The registration statement for a 
mutual fund or open-end management company may specify 
an indefinite aggregate offering amount if such offering 
amount is similarly registered with the Securities and 
Exchange Commission. 



(c) A 



: nt re lating to s e cu r iti e s issued o r 



tn — A r egist r ation statement r elating to s e cu r iti e s is 
to b e — issu e d by — a mutual — fund, — o pe n- e nd management 
com p any, or unit inv e stm e nt t r ust, to be offe r ed fo r a p e r iod 
m exc e ss of one year, must be r enewed annually by p ayment 
of a r enewal fee of one hund r ed dolla r s ($100.00) and by 
filing the following : 

tH A co p y of the cu r rent pros pe ctus and any othe r 

off er ing mate r ials : 

i:ir) On e co p y of any ame n dments to the r egist r ation 

stat e m e nt not prex ' iously filed; and 

(3) A stat e m e nt of the amount of secu r ities sold in this 

stat e to date and the balance of unsold secu r ities 
eff e ctively — registe r ed in this state, ex pr ess e d in 
dolla r s. 



The 



i^al fee and the tiling of the listed 



l e p ayment of the r enewal tec and tne tiling ot tne lis 

documents and r e p o r ts in this Rule shall be made no e a r li er 

than Novembe r 15th and. to assure timely r enewal, should be 

m ade no late r tha n — Decembe r — 15th. Renewal — must b e 

per fect e d p rior to December 31 of each yea r and failu r e to 
timely re n e w will result in th e ex p iration of the r egist r at i on 
stat e m e nt. 

History Note: Authority G.S. 78A-28(b); 78A-28(j): 

78A-49(a): 

Eff. April 1. 1981; 



538 



NORTH CAROLINA REGISTER 



October I, 1997 



12:7 



TEMPORARY RULES 



Amended EJf. September 1, 1990; October I, 1988; January 

1. 1984; July 1, 1982; 

Temporary Amendment Eff. October 1. 1997. 

SECTION .1400 - REGISTRATION OF DEALERS AND 
SALESMEN 

.1401 APPLICATION FOR REGISTRATION OF 
DEALERS 

(a) The application for registration as a dealer shall contain 
the following: 

(1) an executed Uniform Application for Registration 
as a Dealer (Form BD) and the appropriate 
schedules thereto or the appropriate successor form; 

(2) a fee in the amount of two hundred dollars 
($200.00); 

(3) evidence of current registration as a dealer with the 
Securities and Exchange Commission under the 
Securities Exchange Act of 1934; 

(4) evidence of net ca p ital as defined by Rule . 1410(c) 
of this Sec t ion g re a t e r than one hundred thousand 
dollars ($100,000) or evidence of compliance with 
Rule .1410 of this Section; 

(5) any other information the administrator may from 
time to time require. 

(b) The application for registration as a dealer shall be 
filed as follows: 

(1) NASD member dealers shall file applications for 
initial registration in the State of North Carolina 
with the NASAA/NASD Central Registration 
Depository, P.O. Box 37441, Washington, D.C. 
20013 and shall file a manually executed Form BD 
directly with the Securities Division. Applications 
for renewal of registration shall be filed only with 
the Central Registration Depository (see Rule .1406 
of this Section); 

(2) Non-NASD member dealers shall file all 
applications for registration in the State of North 
Carolina directly with the Securities Division. 

(c) The dealer shall file with the administrator, as soon as 
practicable but in no event later than thirty days, notice of 
any disciplinary action taken against the dealer by any 
exchange of which the dealer is a member; the Securities and 
Exchange Commission; the Commodity Futures Trading 
Commission; any national securities association registered 
with the Securities and Exchange Commission pursuant to 
Section 15A of the Securities Exchange Act of 1934 or any 
state securities commission and of any civil suit filed against 
the dealer alleging violation of any federal or state securities 
laws. If the information contained in any document filed 
with the administrator is or becomes inaccurate or incomplete 
in any material respect, the dealer shall file a correcting 
amendment as soon as practicable but in no event later than 
thirty days. 

(d) Registration becomes effective at noon of the 30th day 
after a completed application is filed or such earlier time upon 
issuance of a license or written notice of effective 



registration, unless proceedings are instituted pursuant to 
G.S. 78A-39. The administrator may by order defer the 
effective date after the filing of any amendment but no later 
than noon of the 30th day after the filing of the amendment. 

(e) Every dealer shall notify the administrator of any 
change of address, the opening or closing of any office 
(including the office of any salesman operating apart from the 
dealer's premises) or any material change thereto, in writing 
as soon as practicable or by filing concurrently upon filing 
with NASD an appropriate amendment or schedule to Form 
BD or any successor form. 

History Note; Authority G.S. 78A-36(a); 78A-37(a); 

78A-37(bj; 78A-37(dj; 78A-38(c); 78A-49(a); 

EJf. April 1. 1981; 

Amended Eff. September 1, 1990; October I, 1988; January 

I, 1984; November 1, 1982; 

Temporar,' Amendment Eff. October 1. 1997. 

.1410 MENIMUM FINANCIAL REQUIREMENTS 
FOR DEALERS 

(a) A d e al er , u p on a pp lication for r e gist r ation, must 
pr ovide o r a deale r who is currently r egiste r ed may aft er 
Decemb e r 31, 1984 b e required to pr ovid e , e vidence of net 
ca p ital, as defined by Pa r ag r a p h (e) of this Rule, no t less than 
the — a ppr o pr iately — pr escrib e d amounts — pr ovided — in — this 
Parag r a p h o r in lieu the r eof a dealer may fil e a bond o r 
provid e evidence of a de p osi t of cash o r securities in the 
a ppr o pr iate amount pr ovided as follows: 

ft) Deale r s o r ganiz e d unde r the laws of this S t ate o r 

having their principle office and substantial assets 
in this state shall maintain net ca p ital of at l e as t 
fifty thousand dolla r s ($50,000), o r net ca p ital p lus 
a su r ety bond o r trust account totaling at l e ast fifty 
thousand dollars ($50,000). 

(?■) Dealers t r ading in munici p al bo n ds only; dealers 

t r ading in Investment Com p any secu r ities only; o r 
d e al e rs who do not gene r ally cariy custome r 's 
accounts — as — defined — at — Rtric — 15c3-l. (a)(2) 
pr omulgat e d — by — the — Secu r ities — and — Exchange 
Commission under the Secu r ities Exchange Ac t of 
1 9 34 as am e nded, shall maintain net capital of a t 
least twenty-five thousatid dollars ($25,000), o r ne t 
capital p lus a su r ety bond o r t r ust account totalling 
a t least twenty-five thousand dolla r s ($25,000). 

O-) D e al e rs offe r ing and s e lling direc t p a r tici p ation 

p rog r ams only shall maintain net ca p ital of at least 
fifty thousand dolla r s ($50,000), o r net capital plus 
a surety bond o r t r ust account totalling at least fifty 
thousand dollars ($50,000). 

(4^ All othe r deale r s shall maintain n e t ca p ital of 

seventy-fiv e thousand dollars ($75,000), o r ne t 



capital plus a surety b ond or trust account totalling 
at least seventy-five thousand dollars ($75,000). 
Each dealer registered or required to be registered 
under this Act shall comply with SEC Rules 15c3- 
1. 15c3-2. and 15c3-3 (17 C.F.R. 240.15c3-l. 17 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



539 



TEMPORARY RULES 



C.F.R. 240.15c3-2. and 17 C.F.R. 240.15c3-3). as 

amended from time to time. 
(b) Exce p t as pr ovided by Pa r ag r a p h (c) of this Rul e , any 
Any dealer registe r ed on o r after Janua r y ' 1. 1 9 84 who fails to 
maintain the minimum net capital or net capital p lus a surety 
bond o r t rust account requirement of Paragraph (a) of this 
Rule and- 



:giste r cd before Janua r v 1. 1984 who 



any aeaier regis 
fails to maintain the minimum net ca p ital o r net ca p ital p lus a 
su re ty bond o r trust account r equi r ement of Pa r ag r a p h (a) 



afte r Decembe r 31, 1984 shall immediately suspend offers 
and sales of securities, notify the administrator within three 
business days of such fact, and shall not resume such 
operations until evidence has been submitted to and approved 
in writing by the administrator that the requirements of 
Paragraph (a) of this Rule have been met. 

fci — Should a deal er 's bond be terminated by the su r ety 
r e sulting in the d e aler's failu r e to meet the r equ ir ements of 
Parag r a p h (a) of this Rule and th e bond was not terminated 
du e to fault of the dealer, then the deale r shall be pr ovided a 



r e asonable time p eriod of 



to six months, without th e 



period or up 

necessity of sus p ending offe r s and sales of s e cu r iti e s, to 
obtain anothe r bond in o r d er to meet the requi r ements of 
Parag r aph (a) of this Rul e p r ovided that the deale r notifies the 
administ r ato r in writing within tlve business days of th e 
t er mination of the bond and files such furth e r iiifonriatioii as 
the administrato r may r equi re re garding th e financial status of 
the deale r until evid e nce of com p liance with Parag r a p h (a) of 
this Rul e is pr ovided. 

tdl — If the net ca p ital, o r net ca p i t al p lus a su re ty bond o r 
trust account of a d e al er , is l e ss than one thousand dollars 
(SI .000) above the r equi r ements of Pa r ag r a p h (a) of this Rule 
then such deale r shall notif\ ' th e administ r ato r within fiv e 
busin e ss days and submit a co p y of the d e al er 's cu rr ent 
balanc e sh e ets. — A co p y of the deale r 's cu rr ent balance shee t 
shall be submitted each month the r eafte r until the deale r 's net 
ca p ital, o r net ca p ital p lus a su r ety bond o r tmst account, 
e xc ee ds on e thousand dolla r s (51.000) ove r the minimum 
re qui re m e nts of Pa r ag r a p h (a) of this Rul e . 

(c) For the pu rp oses of this Rule. "N e t Ca p ital" shall m e an 
the excess of total assets over total liabilities as det e i mined by 
g e n er ally acce p ted accounting pr inci p les, exce p t that if any of 
stich — assets hav e — been de pr eciated. — then the — amount — of 
de pr eciation re lative to any p a r ticula r asset may be add e d to 
the de pr eciat e d cost of such ass e ts to com p ute total assets; 
pr ovided howeve r , that the amount r esulting afte r adding such 
de pr eciation does not e xceed the fai r market value of th e 
ass e t. — In the case of an individual, the assets on his balanc e 
sh ee t may be car r ied at estimat e d fai r market valu e , with 
pr ovisions fo r estimated incom e ta.xes on un r ealized gain. 
Fo r th e p u rp ose of calculating the a ppr o pr iate amount of 
su r ety bond which may be r e quired p u r suant to this Rule, n e t 
ca p ital may be pr esumed to b e zero (SO. 00) in situations in 
which a deal e r's liabilities exceed the deale r 's assets. 

tf) — The su r ety bond shall be filed on the No r th Carolina 
Secu r ities .Administ r ato r 's D e al er Bond (NCDD Form) or on 
a form acceptabl e to the administrato r . Fvidcncc of a de p osit 
of cash o r securities shall be filed on th e Ce r tification of 



De p osit of Cash o r Secu r ities (CDCS Form) or on a form 
acce p table to the administrator. 

History Note: Aulhority G.S. 78A-37(d); 78A-49(a); 
Eff. April L 1981: 

Amended Eff. October I. 1988: January 1. 1984; 
Temporary Amendment Eff. October 1_^ 1997. 

.1411 RECORD KEEPING REQUIREMENTS FOR 
DEALERS 

tsd — Ev er y re gist ere d d e al er shall k eep the books and 
r ecords set out in this Pa r ag r a p h, unl e ss othei - wisc designated 
by the administrato r: 

tH blotters — ttrr — othe r — reco r ds — of — o r iginal — entry) 

containing an itemized daily r eco r d of all p u r chases 
and sales of secu r ities, all r ecei p ts and d e liv er i e s of 
securiti e s — (including — certifica t e — numbe r s). — att 
r ecei p ts and disbu r s e m e nts of cash and all othe r 

debits and c r edits. The r eco r d shall show th e 

account fo r which each t r ansaction was affect e d, 
the nam e and amount of secu r i t ies, the unit and 
agg r egate p u r chas e or sal e p ric e (if any), the t r ade 
date, and the name or other d e signa t ion of th e 
per son f r om whom p urchased o r r ec e iv e d o r to 
whom sold o r d e liv ere d: 



(^ 



-and 



(21 ledge r s (o r othe r re co r ds) r enecting all assets 

liabilities, — income, — and — ex pe ns e — and — ca p ital 
accounts: 

f3i l e dg er accounts i temizing se p a r ately as to each cash 

and margin account of e v er y custome r and of the 



deale r and 
re c e i p ts 



p a r tners the r eof, all pu r ch. 
and delive r ies 



-of- 



as e s. 
secu r ities 



stA 



and 



commodities fo r the account and all othe r debits 
and c re dits to th e account; 

t4) ledge r s (or othe r reco r ds) r efl e cting the following : 

tAl secu r ities in t r ansfer; 

tfr) dividends and inte r est r eceived; 



f€^ secu r ities bo rr owed and 

moni e s — bo rr owed 



t&r 



secu r ities loaned 
and — monies 



loaned 

(tog e the r with a reco r d of th e collate r al 
the r eof — and — any — substitutions — in th e 
collate r al); and 



ft 



1 secu r ities 

delive r; 



failed to r eceive and fail e d to 



a secu r ities r eco r d o r ledge r r eflecting se p a r ately 
for each secu r ity as of the clearance dates all "long" 



err short p ositions — (including — secu r ities — m 

saf e kee p ing) ca rr ied by the deale r for its account o r 
fo r the account of its custome r s o r p artne r s and 
showing the location of all secu r ities long and 



offs e tting p osition to all secu r ities sho r r and in all 
cas e s th e name o r designation of the account in 
which each p osition is ca rr ied; 

t&) a memo r andum of each b r oke r age o r de r , and of any 

othe r inst r uction, giv e n o r re c e ived fo r the p urchase 
or — strie — erf — s e cu r it i es — whethe r — executed — or 
unexecuted. The memo r andum shall show th e 



540 



NORTH CAROLINA REGISTER 



October I, 1997 



12:7 



TEMPORARY RULES 



f^ 



iLiiiis and condi t ions of t he o r de r o r inst r uctions 
and any modification o r cancellation the r eof, the 
account for which entered, the time of entiy. the 
price at which executed and. to the extent feasible. 
th e time of execution o r cancellation. O r de r s 



e nt er ed 



pursuant to the exe r cise of disc re tionary 
powe r by the dealer, or any e m p loyee thereof, shall 
be so designated. — The tciin "instruction" shall b e 
deemed to include inst r uctions between p a r tne r s 
and em p loyees of a deale r . — The tcim "time of 
ent r y" shall be deemed to mean the t ime when such 
deale r — t ransmits — ttrc — o r de r — or — instruction — for 
e x e cution, or, if it is not so t r ansmitted, the time 
when it is received ; 

a memorandum of each p urchase and sale of 
secu r ities fo r the account of the deale r showing the 
p rice — and to the extent — f e asible, — the lime of 
execution; 

(8) — co p ies of confi r mations of all p urchases and sales 
and co p i e s of notices of all othe r debits and c r edits 
fo r secu r ities, cash and othe r items for the account 
of custom e rs and partners of the deale r ; 

(9) — a r eco r d in res p ect of each cash and margin account 
with t he deale r containing the name and add re ss of 
the ben e ficial owne r of the account; pr ovided tha t 
in the case of a join t account o r an account of a 
co rp o r ation, — the — re cords — arc — r equi r ed — orriy — in 
re s pe ct of the p e r son o r pe r sons autho r ized to 
tr ansact business fo r the account; 

iiQ) a r eco r d of all p uts, calls, s pr eads, st r addles and 

oth er o p tions in which the deale r has any dir e ct or 

indi r ec t inte r es t or which th e deale r has g r anted o r 

gua r anteed, containing, at least, an id e ntification of 

th e s e cu r ity and th e number of units involved. This 

Section shall not be deemed to requi re a memb er of 

a national secu r ities exchange to mak e o r kee p 

r eco r ds of t r ansactions cl e a re d fo r th e membe r by 

anothe r membe r as are customarily made and ke pt 

by the cl e aring m e mb e r. 

fb) — Eve r y registe r ed deale r shall pr ese r ve fo r a p e r iod of 

no t less than th r ee y e ars, the first two yea r s in a r eadily 

accessible location : 

tij all check books, bank statements, cancelled checks 

and cash r econciliation; 

i¥) all bills r eceivable o r p ayable (o r co p ies the r eof), 

p aid o r un p aid r elating to the business of the 
deal er ; 

t3^ — o r iginals of all communications r eceived and co p ies 
of all communications s e nt by the deale r (including 
inte r offic e — memo r anda — and — communicatio n s) 
r elating to the business of the deale r ; 



t4) aH — trial — balances. 



atto r ney and othe r evidence of the granting of any 
discretionaiy authority given in r es p ect of any 
account, and co p ies of r esolution empowering an 
agent to act on behalf of a co rp o r ation; 

(6) all w r itten agreements (o r copies the r coO entered 

into by a dealer r elating to busin e ss of the dealer, 
including agreem e nts with r es p ect to any account- 
Tor a p eriod of not less than th r ee years after the 
closing of any custome r 's account, any accoun t 
ca r ds o r records which r elate to the terms and 
conditions — with — r es p ect — to — the — o p ening — and 
maintenance of th e accoun t shall be pr eserved by 
eve i 7 registe r ed deale r . — Eve r y r e giste r ed dealer 
shall pr ese r ve du r ing the life of the ente rp rise and 
of — any — successo r — ente rpr is e — aH — p a r tne r ship 
ag r eements, ce r tificates o r articles o r , in the case of 
a — co rp o r ation, — aH — articl e s of inco rp o r ation or 
charte r , minut e books and stock ce r tificate books. 
Afte r — a — r eco r d o r other documents — has — been 
p r e s er ved for two years, a p hotograph thereof on 
film may be substituted the r efo r e fo r the balance of 
the r equired time. 
(a) Unless otherwise provided by order of the Securities 
and Exchange Commission, each dealer registered or required 
to be registered under this Act shall make, maintain and 
preserve books and records in compliance with U.S. 
Securities and Exchange Commission Rules 17a-3. 17a-4. 
15c2-6. and 15c2-ll OJ C.F.R. 24Q.17a-3.17 C.F.R. 
240.17a-4. 17 C.F.R. 240.15c2-6. and 17 C.F.R. 240.15c2- 
1 1). as amended from time to time. 

(c)tb) Every r egiste r ed dealer registered or required to be 
registered under this Act shall maintain within this State, in a 
readily accessible location, all records required by this Rule. 
A written request for the waiver of the provisions of this 
Section may be made to the administrator to permit any 
registered dealer to maintain any of the records required by 
this Section, in some place other than the State of North 
Carolina. In determining whether or not the provisions of 
this Section should be waived the administrator may consider, 
among other things, whether the main office of the dealer is 
in a place outside the State of North Carolina or whether the 
dealer clears all or some of its transactions and uses all or 
some of the bookkeeping facilities of some other dealer whose 
main office is outside the State of North Carolina. 

History Note: Authority G.S. 78A-38(a); 78A-38(b); 

78A-38(d); 78A-49(a); 

Ejf. April 1. 1981: 

Temporary Amendment Eff. October 1. 1997. 

.1412 FINANCIAL STATEMENTS 

The administrato r may r equire any deale r , cithe r r egiste r ed 
o r making a pp lication, to file any and all financial statem e nts 



i5Y 



com p utation — et — agg r egate 
indebtedness and net ca p ital (and wo r king p a p e r s in 
conn e ction the r ewith), financial statements, b r anch which such deale r files with th e S e curiti e s and Exchange 
office r econciliations and internal audit wo r king 
p a p e r s, r elating to th e busin e ss of the dealer; 
-aH — guarantees of accounts — and all — p ow er s of 



Commission or 



any national securities exchange o r national 
s e cu r ities association of which it is a memb e r. — Each broker- 
deale r is r equired to fu r nish the administ r ato r with a co p y of 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



541 



TEMPORARY RULES 



its. audiicd financial statcmenls 60 days afte r i t s fiscal yea r 
ends. Each dealer registered or required to be registered 
under this Act shall comply with SEC Rule 17a-l 1 ( 17 
C.F.R. 240. 17a-l 1), as amended from lime to time, and shall 
file with the Administrator upon request copies of notices and 
reports required under SEC Rules 17a-5. 17a-10. and 17a-l 1 
(17 C.F.R. 240.17a-5. 17 C.F.R. 240.17a-10. and 17 C.F.R. 
240. 17a-l 1). as amended from time to time. 

History Note: Authority G.S. 78A-38(b); 78A-49(c); 

Eff. April 1. 1981: 

Amended Eff. September 1 . 1995: 

Temporan,- Amendment Elf. October 1. 1997. 

SECTION .1500 - MISCELLANEOUS PROVISIONS 

.1506 PUBLIC INFORM.\TION 

Securities r eco r ds shall be classified as public information 
except whe r e: 

t+i The administ r a t o r has determined t ha t a claim o r 

judicial action is in pr og r ess o r a claim against o r 
by th e administ r ato r may r esult in any judicial 
action o r adminis t rative proceeding: 
tH The administ r ato r is conducting o r has conducted a 



p rivat e inv e stigation p u r suant to G.S. 78A-40; 



(3- 



The administ r ato r has dctei mined to conduc t an 
administ r ative hearing privately p u r suant to G.S. 
78A-4 9 (g) : o r 
t4j A s t a t u te , rul e o r o r de r o t he r wise pr ovides. 

History Note: Authority G.S. 78A-46(a); 78A-49(a): 

78A-49(g): 78A-50(c): 132-1.1: 78A-50: 

Eff. April 1. 1981: 

Amended Eff. January 1, 1984: 

Temporan,' Repeal Eff. October 1. 1997. 

.1509 FORMS 

The following forms are available upon request from the 
Securities Division for use in complying with the provisions 
of Chapter 78A (the North Carolina Securities Act) of the 
North Carolina General Statutes and the rules promulgated 
thereunder: 

(1) Uniform Application to Register Securities (Form 
U-1); 

(2) Uniform Application for Registration As a Dealer 
(FormBD); 

(3) Supplement to Schedule F of Form BD; 

(4) Uniform .Application for Securities and 
Commodities Industry Representative and/or Agent 
(Form U-4): 

(5) Uniform Termination Notice for Securities Industry 
Registration (Form U-5); 

(6) Uniform Consent to Service of Process (Form 
U-2); 

(7) Uniform Form of Corporate Resolution (Form 
U-2A); 

(8) North Carolina Securities Administrator's Dealer 



Bond (Form NCDB); 
(9) Certification of Deposit of Cash or Securities 
(FormCDCS); and 

(10) Small Corporate Offerings Registration Form 
(Fo r m U-7). (Form U-7): and 

(11) Form NF. Uniform Investment Company Notice 
Filing. 

History Note: Authority G.S. 78A-49(a)(b); 

Eff. April 1. 1981: 

Amended Eff'. September 1. 1990: October 1. 1988: January 

1. 1984: 

Temporary Amendment Eff. October 1. 1997. 

SECTION .1700 - REGISTRATION OF INVESTMENT 
ADVISERS AND INVESTMENT 
ADVISER REPRESENTATIVES 

.1702 APPLICATION FOR INVESTMENT 
ADVISER REGISTRATION/NOTICE 
nLING FOR INVESTMENT ADVISER 
COVERED UNDER FEDERAL LAW 

(a) The application for initial registration as an investment 
adviser pursuant to Section 78C- 17(a) of the Act shall be filed 
upon Form ADV (Uniform Application for Investment 
Adviser Registration) (17 C.F.R. 279.1) with the 
administrator. The initial application shall include the 
consent to service of process required by Section 78C-46(b) 
of the Act, and shall include the following: 

(1) A statement or certificate showing compliance by 
the investment adviser with the examination 
requirements of Rule .1709; 

(2) Such financial statements as set forth in Rule 
.1708, including at the time of application, a copy 
of the balance sheet for the last fiscal year, and if 
such balance sheet is as of a date more than 45 days 
from the date of filing of the application, an 
unaudited balance sheet prepared as set forth in 
Rule . 1708 as of a date within 45 days of the date 
of filing; 

(3) Evidence of compliance with the minimum 
financial requirements of Rule .1704; 

(4) A copy of the surety bond required by Section 
78C-17(e), if applicable; 

(5) The fee required by Section 78C-17(b) of the Act; 
and 

(6) Any other information the administrator may from 
time to time require. 

(b) The application for renewal of registration as an 
investment adviser shall be filed on Form ADV-S (Annual 
Re p o r t — for — Investment — Advis er s — R e gist ere d — Unde r — the 
Investment Advis er s Act of 1 9 40) (17 C.F.R. 27 9 .3) an 
amended Form ADV and shall contain the following: 

(1) A copy of the surety bond required by Rule .1705, 
if applicable; and 

(2) The fee required by Section 78C-17(b) of the Act. 

(c) The investment adviser shall file with the 



542 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



TEMPORARY RULES 



administrator, as soon as practicable but in no event later than 
30 days, notice of any civil, criminal or administrative 
charges filed against the investment adviser which relate 
directly or indirectly to its activities in the securities or 
financial services business. This notice shall include 
notification of any investigation by any securities, 
commodities, or other financial services regulatory agency 
and any disciplinary, injunctive, restraining, or limiting 
action taken by such agencies, by any coun of competent 
jurisdiction, or by any state administrator with respect to the 
investment adviser's activities in the securities or financial 
services business. Any amendment required by Section 
78C- 18(d) of the Act for an investment adviser shall be made 
on Form ADV in the manner prescribed by that form. Any 
amendment to Form ADV shall be filed with the 
administrator within the time period specified in the 
instructions to that form relating to filings made with the 
Securities and Exchange Commission. 

(d) Registration becomes effective at noon of the 30th day 
after a completed application is filed or such earlier time upon 
issuance of a license or written notice of effective 
registration, unless proceedings are instituted pursuant to 
G.S. 78C-19. The administrator may by order defer the 
effective date after the filing of any amendment but no later 
than noon of the 30th day after the filing of the amendment. 

(e) Every investment adviser shall notify the administrator 
of any change of address, the opening or closing of any office 
(including the office of any investment adviser representative 
operating apart from the investment adviser's premises) or 
any material change thereto, in writing as soon as practicable. 

(f) The registration of an investment adviser shall expire 
on December 31 of each year unless timely renewed. The 
application for renewal of registration should be filed at least 
15 days before the expiration date. 

(g) The notice filing for an investment adviser covered 
under federal law pursuant to G.S. 78C-17(al) shall be filed 
with the Administrator or with a central registration 
depository designated by the Administrator on an executed 
Form ADV (Uniform Form for Investment Adviser 
Registration (17 C.F.R. 279.1)) and shall include: 

(1) a transmittal letter indicating that the Form ADV is 

being submitted by an investment adviser covered 

under federal law pursuant to G.S. 78C-17(al); and 

£2} the fee required under G.S. 78C-17(bl). 

(h) The renewal of the notice filing for a federal covered 

adviser pursuant to G.S. 78C-17(an shall be filed upon 

Schedule I of Form ADV. or another form designated by the 

Administrator, and shall include: 

(1) a transmittal letter indicating that the Form ADV is 
being filed by an investment adviser covered under 
federal law pursuant to G.S. 78C-17(al): and 
{2} the fee required under G.S. 78C-17(bl). 

History Note: Filed as a Temporary Rule Ejf. January 2, 
1989, for a Period of 180 Days to Expire on June 30. 1989; 
Authority G.S. 78C-16(b); 78C-16(d); 78C-17(a); 78C- 
17(al); 78C-17(b): 78C-17(bl); 78C- 17(e); 78C-18(d); 



78C-19(a); 78C-30(a); 78C-30(b); 78C-30(c); 78C-30(d); 

78C-46(b); 

Eff. February 1. 1989; 

Temporary Amendment Eff. October 1. 1997. 

.1703 APPLICATION/INVESTMENT ADVISER 
REPRESENTATIVE REGISTRATION 

(a) The application for initial registration as an investment 
adviser representative pursuant to Section 78C- 17(a) of the 
Act shall be filed upon Form U-4 (Uniform Application for 
Securities Industry Registration or Transfer) with the 
administrator and contain the additional information required 
by this Rule. The initial application shall include the consent 
to service of process required by Section 78C-46(b) of the 
Act. The application for initial registration shall also provide 
the following: 

(1) A statement or certificate showing compliance by 
the investment adviser representative with the 
examination requirements of Rule .1709; and 

(2) The fee required by Section 78C- 17(b) of the Act. 

(b) The application for renewal of registration as an 
investment adviser representative shall, unless waived by the 
administrator, be filed with the administrator. No renewal of 
registration as an investment adviser representative shall be 
effected until the fee required by Section 78C-17(b) of the 
Act is remitted to the administrator. 

(c) The investment adviser representative or the investment 
adviser for which the investment adviser representative is 
registered shall file with the administrator, as soon as 
practicable but in no event later than 30 days, notice of any 
civil, criminal, or administrative charges filed against the 
investment adviser representative which relate directly or 
indirectly to his activities in the securities or financial 
services business. This notice shall include notification of 
any investigation by any securities, commodities, or other 
financial services regulatory agency and any disciplinary, 
injunctive, restraining, or limiting action taken by such 
agencies, by any court of competent jurisdiction, or by any 
state administrator with respect to the investment adviser 
representative's activities in the securities or financial services 
business. Any amendment required by Section 78C- 18(d) of 
the Act for an investment adviser representative shall be made 
on Form U-4 in the manner prescribed by that form. Such 
amended Form U-4 shall be filed with the administrator not 
later than 30 days following the event necessitating such 
amendment. 

(d) Registration becomes effective at noon of the 30th day 
after a completed application is filed or such earlier time upon 
approval of the application by the administrator, unless 
proceedings are instituted pursuant to G.S. 78C-19. The 
administrator may by order defer the effective date after the 
filing of any amendment but no later than noon of the 30th 
day after the filing of the amendment. 

(e) The registration of any investment adviser 
representative shall expire on December 31 of each year 
unless renewed in a timely fashion. The application for 
renewal of registration should be filed at least 15 days before 



12:7 



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543 



TEMPORARY RULES 



the expiration date. The application tor renewal of 
registration of investment adviser representatives shall be 
submitted by the investment adviser or investment adviser 
covered under federal law , who shall file with the Securities 
Division a listing of all investment adviser representatives to 
be renewed along with their current addresses and social 
security numbers. The investment advise r s adviser 
representative renewal list shall be submitted in alphabetical 
order as follows: last name, first name, middle name or 
maiden name; current address; social security number. A fee 
of forty-five dollars (S45.00) for each investment adviser 
representative made payable to the North Carolina Secretary 
of State shall be submitted along with the investment adviser 
representative renewal list. 

History Note: Filed as a Temporary Rule EJf. January 2, 

1989. for a Period of 180 Da\s to Expire on June 30. 1989; 

Authority G.S. 78C-16(b); 7SC-17(a): 78C-17(b); 78C-18(d); 

78C-19(a); 78C-30(a): 78C-30(b): 78C-46(b); 

Eff. Februar\- 1. 1989: 

Temporary' Amendment Eff. October 1^ 1997. 

.1704 MINIMUM FINANCIAL REQLHREMENTS 
FOR INVESTMENT ADVISERS 

(a) Unless an investment adviser posts a bond pursuant to 
Rule .1705, an in\'estment adviser registered or required to be 
registered under the Act who has custody of client funds or 
securities shall maintain at all times a minimum net worth of 
thirty-five thousand dollars (535,000.00), and every 
investment adviser registered or required to be registered 
under the Act who has discretionary authority over client 
funds or securities but does not have custody of client funds 
or securities shall maintain at all times a minimum net worth 
often thousand dollars (SIO.OOO.OO). 

(b) Unless otherwise exempted, as a condition of the right 
to continue to transact business in this state, every investment 
adviser registered or required to be registered under the Act 
shall by the close of business on the next business day notify 
the administrator if such investment adviser's total net worth 
is less than the minimum required. After transmitting such 
notice, each investment adviser shall file by the close of 
business on the next business day a written report with the 
administrator of its financial condition, including the 
following; 

(1) A trial balance of all ledger accounts; 

(2) A statement of all client funds or securities which 
are not segregated; 

(3) A computation of the aggregate amount of client 
ledger debit balances; and 

(4) A statement as to the number of client accounts. 

(c) For purposes of this Rule, the term "net worth" shall 
mean an excess of assets over liabilities, as determined by 
generally accepted accounting principles, but shall not include 
as assets: prepaid expenses (except as to items properly 
classified as current assets under generally accepted 
accounting principles), deferred charges, subordinated loans, 
goodwill, franchise rights, organizational expenses, patents. 



copyrights, marketing rights, unamortized debt discount and 
expense, all other assets of intangible nature; home, home 
furnishings, automobile(s), and any other personal items not 
readily marketable in the case of an individual; advances or 
loans to stockholders and officers in the case of a corporation; 
and advances or loans to partners in the case of a pannership. 

(d) The administrator may require that a current appraisal 
be submitted in order to establish the worth of any asset. 

(e) Every investment adviser that has its principal place of 
business in a state other than this state shall maintain only 
such minimum capital as required by the state in which the 
investment adviser maintains its principal place of business, 
provided the investment adviser is licensed in such state and 
is in compliance with such state's minimum capital 
requirements. 

Histor\' Note: Filed as a Temporary Rule Eff. January 2. 
1989. for a Period of 180 Days to Expire on June 30, 1989; 
Authority G.S. 78C- 17(d); 78C-18(c); 78C- 18(d); 78C-30(a); 
Eff. February- 1. 1989: 
Amended Eff. September 1 . 1995; 
Temporary Amendment Eff. October 1. 1997. 

.1705 BONDING REQUIREMENTS FOR CERTAIN 
INVESTMENT ADVISERS 

(a) Every investment adviser having custody of or 
discretionary authority over client funds or securities shall be 
bonded in an amount of not less than thirty-five thousand 
dollars ($35,000.00) by a bonding company qualified to do 
business in this state or in lieu thereof may provide evidence 
of a deposit of cash or securities in such amount. The 
requirements of this Rule shall not apply to those applicants 
or registrants who comply with the requirements of Rule 
.1704. 

(b) Should an investment adviser's bond be terminated by 
the surety resulting in the investment adviser's failure to meet 
the requirements of Paragraph (a) of this Rule and the bond 
was not terminated due to fault of the investment adviser, 
then the investment adviser shall be provided a reasonable 
time period up to six months, without the necessity of ceasing 
to do business as an investment adviser, to obtain another 
bond in order to meet the requirements of Paragraph (a) of 
this Rule provided that the investment adviser notifies the 
administrator in writing within two business days of the 
termination of the bond and files such further information as 
the administrator may require regarding the financial status of 
the investment adviser until evidence of compliance with 
Paragraph (a) of this Rule is provided. 

(c) The surety bond shall be filed with the administrator on 
Form NCIAB (North Carolina Securities Division Investment 
Adviser's Bond) or on a form acceptable to the administrator. 
Evidence of a deposit of cash or securities shall be filed with 
the administrator on Form CDCS-IA (Certification of Deposit 
of Cash or Securities — Investment Advisers) or on a form 
acceptable to the administrator. 

(d) An investment adviser that has its principal place of 
business in a state other than this state shall be exempt from 



544 



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October I, 1997 



12:7 



TEMPORARY RULES 



the requirements of Paragraph (a) of this Rule, provided that 
the investment adviser is registered as an investment adviser 
in the state where h has its principal place of business and is 
in compliance with such state's requirements relating to 
bonding. 

History Note: Filed as a Temporary Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30, 1989: 
Authority G.S. 78C-17(d): 78C-18(b): 78C-18(c); 78C-30(a): 
Eff. February 1, 1989: 
Temporary Amendment Eff. October 1. 1997. 

.1706 RECORD-KEEPING REQUIREMENTS FOR 
INVESTMENT ADVISERS 

(a) Every investment adviser registered or required to be 
registered under the Act shall make and keep true, accurate 
and current the following books, ledgers and records: 

(1) A journal or journals, including cash receipts and 
disbursements records, and any other records of 
original entry forming the basis of entries in any 
ledger; 

(2) General and auxiliary ledgers (or other comparable 
records) reflecting asset, liability, reserve, capital, 
income and expense accounts; 

(3) A memorandum of each order given by the 
investment adviser for the purchase or sale of any 
security, of any instruction received by the 
investment adviser from the client concerning the 
purchase, sale, receipt or delivery of a particular 
security, and of any modification or cancellation of 
any such order or instruction. Such memoranda 
shall show the terms and conditions of the order, 
instruction, modification or cancellation; shall 
identify the person connected with the investment 
adviser who recommended the transaction to the 
client and the person who placed such order; and 
shall show the account for which entered, the date 
of entry, and the bank or dealer by or through 
whom executed where appropriate. Orders entered 
pursuant to the exercise of discretionary power 
shall be so designated; 

(4) All check books, bank statements, canceled checks 
and cash reconciliations of the investment adviser; 

(5) All bills or statements (or copies thereof), paid or 
unpaid, relating to the business of the investment 
adviser as such; 

(6) All trial balances, financial statements, and internal 
audit working papers relating to the business of 
such investment adviser; 

(7) Originals of all written communications received 
and copies of all written communications sent by 
such investment adviser relating to: 

(A) Any recommendation made or proposed to 
be made and any advice given or proposed to 
be given, 

(B) Any receipt, disbursement or delivery of 
funds or securities, or 



(C) The placing or execution of any order to 
purchase or sell any security; provided, 
however, 

(i) that the investment adviser shall not be 
required to keep any unsolicited 
market letters and other similar 
communications of general public 
distribution not prepared by or for the 
investment adviser, and 
(ii) that if the investment adviser sends 
any notice, circular or other 
advertisement offering any report, 
analysis, publication or other 
investment advisory service to more 
than ten persons, the investment 
adviser shall not be required to keep a 
record of the names and addresses of 
the persons to whom it was sent; 
except that if such notice, circular or 
advertisement is distributed to persons 
named on any list, the investment 
adviser shall retain with the copy of 
such notice, circular or advertisement 
a memorandum describing the list and 
the source thereof; 

(8) A list or other record of all accounts in which the 
investment adviser is vested with any discretionary 
power with respect to the funds, securities or 
transactions of any client; 

(9) All powers of attorney and other evidences of the 
granting of any discretionary authority by any 
client to the investment adviser, or copies thereof; 

(10) All written agreements (or copies thereof) entered 
into by the investment adviser with any client or 
otherwise relating to the business of such 
investment adviser as such; 

(11) A copy of each notice, circular, advertisement, 
newspaper article, investment letter, bulletin or 
other communication recommending the purchase 
or sale of a specific security, which the investment 
adviser circulates or distributes, directly or 
indirectly, to ten or more persons (other than 
clients receiving investment supervisory services or 
persons connected with such investment adviser), 
and if such notice, circular, advertisement, 
newspaper article, investment letter, bulletin or 
other communication does not state the reasons for 
such recommendation, a memorandum of the 
investment adviser indicating the reasons thereof; 

(12) The following records: 

(A) A record of every transaction in a security in 
which the investment adviser or any advisory 
representative of such investment adviser 
has, or by reason of such transaction 
acquires, any direct or indirect beneficial 
ownership, except: 
(i) Transactions effected in any account 



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over which neither the investment 

adviser nor any advisory 

representative of the investment 

adviser has any direct or indirect 

influence or control; and 

(ii) Transactions in securities which are 

direct obligations of the United States. 

Such record shall state the title and amount of the security 

involved; the date and nature of the transaction (i.e., 

purchase, sale or other acquisition or disposition); the price at 

which it was effected; and the name of the dealer or bank 

with or through whom the transaction was effected. Such 

record may also contain a statement declaring that the 

reporting or recording of any such transaction shall not be 

construed as an admission that the investment adviser or 

advisory representative has any direct or indirect beneficial 

ownership in the security. A transaction shall be recorded 

not later than ten days after the end of the calendar quarter in 

which the transaction was effected. 

(B) For purposes of this Subparagraph (12), the 
term "advisory representative" shall mean 
any partner, officer or director of the 
investment adviser; any employee who 
makes any recommendation, who participates 
in the determination of which 
recommendation shall be made, or whose 
functions or duties relate to the determination 
of which recommendation shall be made; any 
employee who, in connection with his duties 
(other than clerical, ministerial or 
administrative duties), obtains any 
information concerning which securities are 
being recommended prior to the effective 
dissemination of such recommendations or of 
the information concerning such 
recommendations; and any of the following 
persons who obtain information concerning 
securities recommendations being made by 
such investment adviser prior to the effective 
dissemination of such recommendations or of 
the information concerning such 
recommendations: 
(i) any person in a control relationship to 

the investment adviser, 
(ii) any affiliated person of such 

controlling person, and 
(iii) any affiliated person of such affiliated 
person. 
"Control" shall have the same meaning as that set forth in 
Section 2(a)(9) of the Investment Company Act of 1940, as 
amended. 

(C) An investment adviser shall not be deemed to have 
violated the provisions of this Subparagraph (12) 
because of his failure to record securities 
transactions of any advisory representative if he 
establishes that he instituted adequate procedures 
and used reasonable diligence to obtain promptly 



reports of all transactions required to be recorded; 
(13) Records required of investment advisers primarily 
engaged in other businesses: 

(A) Notwithstanding the provisions of 
Subparagraph (12) in this Rule, where the 
investment adviser is primarily engaged in a 
business or businesses other than advising 
registered investment companies or other 
advisory clients, a record must be maintained 
of every transaction in a security in which 
the investment adviser or any advisory 
representative of such investment adviser 
has, or by reason of such transaction 
acquires, any direct or indirect beneficial 
ownership, except: 

(i) Transactions effected in any account 

over which neither the investment 

adviser nor any advisory 

representative of the investment 

adviser has any direct or indirect 

influence or control; and 

(ii) Transactions in securities which are 

direct obligations of the United States. 

Such record shall state the title and amount of the security 

involved; the date and nature of the transaction (i.e., 

purchase, sale or other acquisition or disposition); the price at 

which it was effected; and the name of the dealer or bank 

with or through whom the transaction was effected. Such 

record may also contain a statement declaring that the 

reporting or recording of any such transaction shall not be 

construed as an admission that the investment adviser or 

advisory representative has any direct or indirect beneficial 

ownership in the security. A transaction shall be recorded 

not later than ten days after the end of the calendar quarter in 

which the transaction was effected. 

(B) An investment adviser is "primarily engaged 
in a business or businesses other than 
advising registered investment companies or 
other advisory clients" when, for each of its 
three most recent fiscal years or for the 
period of time since organization, whichever 
is lesser, the investment adviser derived, on 
an unconsolidated basis, more than 50 
percent of: 

(i) its total sales and revenues, and 
(ii) its income (or loss) before income 
taxes and extraordinary items, from 
such other business or businesses. 

(C) For purposes of this Subparagraph (13), the 
term "advisory representative", when used in 
connection with a company primarily 
engaged in a business or businesses other 
than advising registered investment 
companies or other advisory clients, shall 
mean any partner, officer, director or 
employee of the investment adviser who 
makes any recommendation, who participates 



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in the determination of which 
recommendation shall be made, or whose 
functions or duties relate to the determination 
of which recommendation shall be made, or 
who, in coimection with his duties (other 
than clerical, ministerial or administrative 
duties), obtains any information concerning 
which securities are being recommended 
prior to the effective dissemination of such 
recommendations or of the information 
concerning such recommendations; and any 
of the following persons who obtain 
information concerning securities 

recommendations being made by such 
investment adviser prior to the effective 
dissemination of such recommendations or of 
the information concerning such 
recommendations: 
(i) any person in a control relationship to 

the investment adviser, 
(ii) any affiliated person of such 

controlling person, and 
(iii) any affiliated person of such affiliated 
person. 
"Control" shall have the same meaning as that set forth in 
Section 2(a)(9) of the Investment Company Act of 1940, as 
amended. 

(D) An investment adviser shall not be deemed to 

have violated the provisions of this 

Subparagraph (13) because of his failure to 

record securities transactions of any advisory 

representative if he establishes that he 

instituted adequate procedures and used 

reasonable diligence to obtain promptly 

reports of all transactions required to be 

recorded; and 

(14) A copy of each written statement and each 

amendment or revision thereof, given or sent to any 

client or prospective client of such investment 

adviser in accordance with the provisions of Rule 

.1707, and a record of the dates that each written 

statement, and each amendment or revision thereof, 

was given, or offered to be given, to any client or 

prospective client who subsequently becomes a 

client. 

(b) If an investment adviser subject to Paragraph (a) of this 

Rule has custody or possession of securities or funds of any 

client, the records required to be made and kept under 

Paragraph (a) of this Rule shall also include: 

(1) A journal or other record showing all purchases, 
sales, receipts and deliveries of securities (including 
certificate numbers) for such accounts and all other 
debits and credits to such accounts; 

(2) A separate ledger account for each such client 
showing all purchases, sales, receipts and deliveries 
of securities, the date and price of each such 
purchase and sale, and all debits and credits; 



(3) 



(4) 



(2) 



(d) 



Copies of confirmations of all transactions effected 
by or for the account of any such client; and 
A record for each security in which any such client 
has a position, which record shall show the name of 
each such client having any interest in each 
security, the amount or interest of each such client, 
and the locations of each such security, 
(c) Every investment adviser subject to Paragraph (a) of 
this Rule who renders any investment supervisory or 
management service to any client shall, with respect to the 
portfolio being supervised or managed and to the extent that 
the information is reasonably available to or obtainable by the 
investment adviser, make and keep true, accurate and current: 
(1) Records showing separately for each such client the 
securities purchased and sold, and the date, amount 
and price of each such purchase and sale; and 
For each security in which any such client has a 
current position, information from which the 
investment adviser can promptly furnish the name 
of each such client, and the current amount or 
interest of such client. 
Any books or records required by this Rule may be 
maintained by the investment adviser in such manner that the 
identity of any client to whom such investment adviser 
renders investment supervisory services is indicated by 
numerical or alphabetical code or some similar designation, 
(e) Duration requirement for maintenance of records: 

(1) All books and records required to be made under 
the provisions of Paragraphs (a) to (c)(1), 
inclusive, of this Rule shall be maintained and 
preserved in an easily accessible place for a period 
of not less than five years from the end of the fiscal 
year during which the last entry was made on such 
record, the first two years in an appropriate office 
of the investment adviser. 

(2) Partnership articles and any amendments thereto, 
articles of incorporation, charters, minute books, 
and stock certificate books of the investment 
adviser and of any predecessor, shall be maintained 
in the principal office of the investment adviser and 
preserved until at least three years after termination 
of the enterprise. 

(0 An investment adviser subject to Paragraph (a) of this 

Rule, before ceasing to conduct or discontinuing business as 

an investment adviser, shall arrange for and be responsible 

for the preservation of the books and records required to be 

maintained and preserved under this Rule for the remainder of 

the period specified in this Rule, and shall notify the 

administrator in writing of the exact address where such 

books and records will be maintained during such period. 

(g) Preservation and maintenance of records: 

(1) The records required to be maintained and 

preserved pursuant to this Rule may be immediately 

produced or reproduced by photograph on film or, 

as provided in Subparagraph (g)(2) of this Rule, on 

magnetic disk, tape or other computer storage 

medium, and be maintained and preserved for the 



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required time in that form. If records are produced 
or reproduced by photographic film or computer 
storage medium, the investment adviser shall: 

(A) arrange the records and index the films or 
computer storage medium so as to permit the 
immediate location of any particular record: 

(B) be ready at all times to provide, and 
promptly provide, any facsimile enlargement 
of film or computer printout or copy of the 
computer storage medium which the 
administrator by its examiners or other 
representatives may request: 

(C) store separately from the original one other 
copy of the film or computer storage medium 
for the time required; 

(D) with respect to records stored on a computer 
storage medium, maintain procedures for 
maintenance and preservations of, and access 
to. records from loss, alteration, or 
destruction; and 

(E) with respect to records stored on 
photographic film, at all times have available 
for the administrator's examination of its 
records pursuant to Section 78C- 18(e) of the 
Act, facilities for immediate, easily readable 
projection of the film and for producing 
easily readable facsimile enlargements. 

(2) Pursuant to Subparagraph (g)(1) of this Rule an 

adviser may maintain and preserve on computer 

tape or disk or other computer storage medium 

records which, in the ordinary course of the 

adviser's business, are created by the ad\iser on 

electronic media or are received by the adviser 

solely on electronic media or by electronic data 

transmission. 

(h) For purposes of this Rule, "investment super\isor)' 

services" means the gi\'ing of continuous advice as to the 

investment of funds on the basis of the individual needs of 

each client. 

(i) Every registered investment adviser shall maintain 
within this state, in a readily accessible location, all records 
required by this Rule. A written request for the waiver of the 
provisions of this Section may be made to the administrator to 
permit any registered investment ad\iser to maintain any of 
the records required by this Rule in some place other than the 
State of North Carolina. In determining whether or not the 
provisions of this Rule should be waived, the administrator 
may consider, among other things, whether the main office of 
the investment adviser is in a place outside the State of North 
Carolina or whether the investment adviser uses all or some 
of the bookkeeping facilities of some other investment adviser 
whose main office is outside the State of North Carolina. 

(j) Every investment adviser that has its principal place of 
business in a state other than this state shall be exempt from 
the requirements of this section, pro\ided the investment 
adviser is licensed in such state and is in compliance with 
such state's recordkeeping requirements. 



History Note: Filed as a Temporary Rule Eff. January 2. 
1989. for a Period of 180 Days to Expire on June 30, 1989; 
Authority G.S. 78C-18(a): 78C- 18(b): 78C-18(e); 78C-30(a); 
Eff. February 1. 1989: 
Temporary Amendment Eff. October 1_^ 1997. 

Mil CHANGE OF NAIVIE OF INVESTMENT 
ADVISER 

Where only a change in the name of the investment adviser 
applicant or registrant occurs, an amended Form ADV or 
ADV-S shall be filed with the administrator together with any 
amendments to the organizational documents, or 
accompanying letters of explanation, within 30 days of the 
date of the change. The investment adviser shall return its 
license and a new license will be issued reflecting the name 
change. There will be no fee for reissuance of the license. 
Each investment adviser representative shall retain his 
investment adviser representative's license and this license 
shall suffice as evidence of licensing under the new 
investment adviser name until renewal. 

History Note: Filed as a Temporary- Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30, 1989: 
Authority- G.S. 78C-17(c>: 78C- 18(d): 78C-30(a): 78C-30(b); 
Eff. February 1. 1989: 
Temporary Amendment Eff. October 1. 1997. 

.1713 INVEST ADVISER MERGER/ 

CONSOLIDATION/ACQUISITION/ 
SUCCESSION 

(a) When there is a merger, consolidation, acquisition, 
succession, or other similar fundamental change in the 
ownership of a registered investment adviser, the surviving or 
new entity shall file with the administrator, prior to such 
fundamental change, an amended Form ADV o r ADV-S or 
successor form, with the plan of fundamental change and a 
letter or any documents of explanation including the date of 
mass transfer of investment adviser representatives pursuant 
to Paragraph (c) of this Rule if contemplated. As soon as 
practicable, but not later than 30 days after the fundamental 
change, the surviving or new entity shall file with the 
administrator the current financial statements of the surviving 
or new entitv'; the amended or new charter and by-laws; and, 
if applicable, a copy of the certificate of merger, 
consolidation or other fundamental change. 

(b) The registration of the surviving or new entity shall be 
granted by the administrator on the same date that the 
fundamental change becomes effective. Where the 
fundamental change results in a change in the name of the 
surviving or new entity from the name listed on any 
outstanding investment adviser's license, the license shall be 
returned and a new license reflecting the new name will be 
issued. There will be no fee for reissuance of a license. 

(c) Investment advisers shall effect mass transfers of 
investment adviser representatives by filing with the 
Securities Di\ision a Form U-4 or successor form for each 



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investment adviser representative to be transferred from the 
nonsurviving entity to the surviving or new entity and a Form 
U-5 or successor form for each investment adviser 
representative not to be transferred. Each transferred 
investment adviser representative shall retain his investment 
adviser representative's license which shall suffice as 
evidence of registration with the surviving or new entity until 
renewal. The transfer of the investment adviser 
representative is effective upon receipt of the Form U-4 or 
successor form by the Securities Division. All Form U-5's or 
successor forms shall be filed as soon as practicable but no 
later than 10 business days after the fundamental change. A 
regular application fee shall be paid by the surviving or new 
investment adviser for each investment adviser representative 
in such transfer. 

History Note: Filed as a Temporary Rule Eff. January 2. 
1989, for a Period of 180 Days to Expire on June 30, 1989; 
Authority G.S. 78C-16(b); 78C-17(a); 78C-17(c); 78C-18(b); 
78C-18(c); 78C-18(d); 78C-30(a); 78C-30(b); 
Eff. February 1, 1989; 
Amended Eff. September 1, 1995; 
Temporary' Amendment Eff. October 1. 1997. 

.1714 REGISTRATION OF PARTNERS/ 

EXECUTIVE OmCERS/DIRECTORS 

(a) Any partner, executive officer, director, or a person 
occupying a similar status or performing similar functions 
who represents a registered investment adviser in transacting 
business in this state as an investment adviser shall be 
registered as an investment adviser representative pursuant to 
Paragraph (b) of this Rule. 

(b) Automatic investment adviser representative 
registration for partners, executive officers or directors of a 
registered investment adviser or a person occupying a similar 
status or performing similar functions shall be obtained by 
filing an original or amended Form ADV o r ADV-S and any 
appropriate schedule thereto, providing the required 
disclosures regarding the registrant, and a written notice to 
the Securities Division identifying the registrant and that the 
registrant will engage in the activities as described in 
Paragraph (a) of this Rule; provided, however, if such 
information is currently on file with the administrator then 
the written notice only is required to be filed. Automatic 
registration shall lapse where a material change in the 
information reported on Form ADV o r ADV-S or any 
schedule thereto regarding the registrant has occurred and has 
not been reported to the Securities Division by filing an 
original or amended Form ADV o r ADV-S or the appropriate 
schedule therewith current information within ten business 
days of the material change. The investment adviser shall 
timely inform the Securities Division in writing when any 
registrant under this Paragraph ceases to engage in the 
activities described in Paragraph (a) of this Rule for the 
purposes of termination of the automatic investment adviser 
representative registration. Annual renewal is automatic upon 
renewal of the investment adviser registration. 



(c) Failure to maintain a current automatic registration 
pursuant to Paragraph (b) of this Rule for those persons 
described in Paragraph (a) of this Rule may result in violation 
of G.S. 78C-16. 

(d) Automatic registration may be denied, revoked, 
suspended, restricted or limited or the registrant censured as 
provided by G.S. 78C-19. Nothing in this Rule shall limit 
the administrator's authority to institute administrative 
proceedings against an investment adviser, or an applicant for 
investment adviser registration due to the qualifications of or 
disclosures regarding a person described in Paragraph (a) of 
this Rule. 

(e) An investment adviser representative shall not be 
registered with more than one investment adviser regardless 
of whether registration is accomplished or contemplated 
under this Rule or Rule .1703 of this Section unless each of 
the investment advisers which employs or associates the 
investment adviser representative is under common ownership 
or control. 

(f) For the purposes of this Rule, "Executive Officer" shall 
mean the chief executive officer, the president, the principal 
financial officer, each vice president with responsibility 
involving policy making functions for a significant aspect of 
the investment adviser's business, the secretary, the treasurer, 
or any other person performing similar functions with respect 
to any organization whether incorporated or unincorporated. 

History Note: Filed as a Temporary Rule Eff. January 2, 

1989, for a Period of 180 Days to Expire on June 30, 1989; 

Authority G.S. 78C-16(a); 78C-16(b); 78C-17(a); 78C-18(b); 

78C- 18(d); 78C-19(a); 78C-30(a); 78C-30(b); 

Eff. February 1, 1989; 

Temporary Amendment Eff. October 1. 1997. 

SECTION .1800 - MISCELLANEOUS PROVISIONS - 
INVESTMENT ADVISERS 

.1801 DISHONEST OR UNETHICAL PRACTICES 

(a) An investment adviser or an investment adviser 
covered under federal law is a fiduciary and has a duty to act 
primarily for the benefit of its clients. The provisions of this 
subsection apply to investment advisers covered under federal 
law to the extent that the conduct alleged is fraudulent or 
deceptive, or as otherwise permitted by the National 
Securities Markets Improvement Act of 1996 (Pub. L No. 
104-290). While the extent and nature of his duty varies 
according to the nature of the relationship between an 
investment adviser and its clients and the circumstances of 
each case, an investment adviser or an investment adviser 
covered under federal law shall not engage in unethical 
business practices, including the following: 

(1) Recommending to a client to whom investment 
supervisory, management or consulting services are 
provided the purchase, sale or exchange of any 
security without reasonable grounds to believe that 
the recommendation is suitable for the client on the 
basis of information furnished by the client after 



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(2) 
(3) 

(4) 



(5) 



(6) 



(7) 



(8) 



(9) 



(10) 



reasonable inquiry concerning the client's 

investment objectives, financial situation and needs, 

and any other information known or acquired by (11) 

the investment adviser after reasonable examination 

of such of the client's financial records as may be 

provided to the investment adviser; 

Placing an order to purchase or sell a security for 

the account of a client without authority to do so; 

Placing an order to purchase or sell a security for 

the account of a client upon instruction of a third 

party without first having obtained a written 

third-party trading authorization from the client; 

Exercising any discretionary authority in placing an 

order for the purchase or sale of securities for a 

client without obtaining written discretionary 

authority from the client within 10 business days 

after the date of the first transaction placed pursuant 

to oral discretionary authority. Discretionary 

power does not include a power relating solely to (12) 

the price at which, or the time when, an order 

involving a definite amount of a specified security 

shall be executed, or both; (13) 

Inducing trading in a client's account that is 

excessive in size or frequency in view of the 

financial resources, investment objectives and 

character of the account; (14) 

Borrowing money or securities from a client unless 

the client is a dealer, an affiliate of the investment 

adviser, or a financial institution engaged in the (15) 

business of lending funds or securities; 

Lending money to a client unless the investment 

adviser is a financial institution engaged in the 

business of lending funds or a dealer, or unless the 

client is an affiliate of the investment adviser; 

Misrepresenting to any advisory client, or 

prospective advisory client, the qualifications of the 

investment adviser or any employee of the 

investment adviser, or misrepresenting the nature of 

the advisory services being offered or fees to be (16) 

charged for such service, or omitting to state a 

material fact necessary to make the statements made 

regarding qualifications, services or fees, in light of 

the circumstances under which they are made, not 

misleading; 

Providing a report or recommendation to any 

advisory client prepared by someone other than the 

adviser without disclosing that fact. (This 

prohibition does not apply to a situation in which 

the adviser uses published research reports or 

statistical analyses to render advice or where an 

adviser orders such a report in the normal course of 

providing service.); 

Charging a client an advisory fee that is (17) 

unreasonable in the light of the type of services to 

be provided, the experience and expertise of the 

adviser, the sophistication and bargaining power of 

the client, and whether the adviser has disclosed 



that lower fees for comparable services may be 
available from other sources; 

Failing to disclose to a client in writing before 
entering into or renewing an advisory agreement 
with that client any material conflict of interest 
relating to the adviser or any of its employees 
which could reasonably be expected to impair the 
rendering of unbiased and objective advice 
including; 

(A) Compensation arrangements connected with 
advisory services to clients which are in 
addition to compensation from such clients 
for such services; and 

(B) Charging a client an advisory fee for 
rendering advice when a commission for 
executing securities transactions pursuant to 
such advice will be received by the adviser 
or its employees; 

Guaranteeing a client that a specific result will be 
achieved (gain or no loss) as a result of the advice 
which will be rendered; 

Publishing, circulating or distributing any 
advertisement which does not comply with Rule 
206(4)- 1 under the Investment Advisers Act of 
1940; 

Disclosing the identity, affairs or investments of 
any client to any third party unless required by law 
to do so, or unless consented to by the client; 
Taking any action, directly or indirectly, with 
respect to those securities or funds in which any 
client has any beneficial interest, where the 
investment adviser has custody or possession of 
such securities or funds when the adviser's action is 
subject to and does not comply with the 
safekeeping requirements of Rule 206(4)-2 under 
the Investment Advisers Act of 1940, unless the 
investment adviser is exempt from such 
requirements by virtue of Rule 206(4)-2(b); 
Entering into, extending or renewing any 
investment advisory contract, other than a contract 
for impersonal advisory services, unless such 
contract is in writing and discloses, in substance: 
the services to be provided; the term of the 
contract; the advisory fee or the formula for 
computing the fee; the amount or the manner of 
calculation of the amount of the prepaid fee to be 
returned in the event of contract termination or 
non-performance; whether the contract grants 
discretionary authority to the adviser; and that no 
assignment of such contract shall be made by the 
investment adviser without the consent of the other 
party to the contract; 

Failing to disclose to any client or prospective 

client all material facts with respect to: 

(A) A financial condition of the adviser that is 

reasonably likely to impair the ability of the 

adviser to meet contractual commitments to 



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clients, if the adviser has discretionary 
authority (express or implied) or custody 
over such client's funds or securities, or 
requires prepayment of advisory fees of more 
than five hundred dollars ($500.00) from 
such client, six months or more in advance; 
or 
(B) A legal or disciplinary event that is material 
to an evaluation of the adviser's integrity or 
ability to meet contractual commitments to 
clients; and 

(18) Utilizing an agent or subagent who satisfies the 
definition of an investment adviser representative as 
set forth in G.S. 78C-2(3), where such agent or 
subagent is not registered as an investment adviser 
representative pursuant to G.S. 78C-16t 

(19) Failing to establish, maintain, and enforce written 
policies and procedures reasonably designed to 
prevent the misuse of material nonpublic 
information contrary to the provisions of Section 
204A of the Investment Advisers Act of 1940; 

(20) Entering into, extending, or renewing any advisory 
contract contrary to the provisions of Section 205 
of the Investment Advisers Act of 1940; 

(21) To indicate, in an advisorv contract, any condition, 
stipulation, or provisions binding any person to 
waive compliance with any provision of this Act or 
of the Investment Advisers Act of 1940. or any 
other practice that would violate Section 215 of the 
Investment Advisers Act of 1940; 

(22) Engaging in any act, practice, or course of business 
which is fraudulent, deceptive, or manipulative in 
contravention of Section 206(4) of the Investment 
Advisers Act of 1940; 

(23) Engaging in conduct or any act, indirectly or 
through or by any other person, which would be 
unlawful for such person to do directly under the 
provisions of tjiis Act or any rule or regulation 
thereunder. 

The conduct set forth in Rule .1801(a) is not exclusive. It 
also includes employing any device, scheme, or artifice to 
defraud or engaging in any act, practice or course of business 
which operates or would operate as a fraud or deceit. The 
federal statutory and regulatory provisions referenced herein 
shall apply both to investment advisers and to investment 
advisers covered under federal law, to the extent permitted by 
the National Securities Markets Improvement Act of 1996 
(Pub. L. No. 104-290). 

(b) There shall be a rebuttable presumption that the 
following legal or disciplinary events involving the adviser or 
a management person of the adviser (any of the foregoing 
being referred to hereafter as "person") that were not resolved 
in the person's favor or subsequently reversed, suspended, or 
vacated are material within the meaning of Subparagraph 
(a)(17)(B) of this Rule for a period of 10 years from the time 
of the event: 

(1) A criminal or civil action in a court of competent 



jurisdiction in which the person: 

(A) was convicted, pleaded guilty or nolo 
contendere ("no contest") to a felony or 
misdemeanor, or is the named subject of a 
pending criminal proceeding (any of the 
foregoing referred to hereafter as "action"), 
and such action involved: an 
investment-related business, fraud, false 
statements, or omissions; wrongful taking of 
property; or bribery, forgery, counterfeiting, 
or extortion; 

(B) was found to have been involved in a 
violation of an investment-related statute or 
regulation; or 

(C) was the subject of any order, judgment, or 
decree permanently or temporarily enjoining 
the person from, or otherwise limiting the 
person from, engaging in any 
investment-related activity; 

(2) Administrative proceedings before the 
Administrator, Securities and Exchange 
Commission, any other federal regulatory agency 
or any other state agency (any of the foregoing 
being referred to hereafter as "agency") in which 
the person: 

(A) was found to have caused an 
investment-related business to lose its 
authorization to do business; 

(B) was found to have been involved in a 
violation of an investment-related statute or 
regulation and was the subject of an order by 
the agency denying, suspending, or revoking 
the authorization of the person to act in, or 
barring or suspending the person's 
association with, an investment-related 
business or otherwise significantly limiting 
the person's investment-related activities; or 

(C) was found to have engaged in an act or a 
course of conduct which resulted in the 
issuance by the agency of an order to cease 
and desist the violation of the provisions of 
any investment-related statute or rule; or 

(3) Self-Regulatory Organization (SRO) proceedings in 
which the person: 

(A) was found to have caused an 
investment-related business to lose its 
authorization to do business; or 

(B) was found to have been involved in a 
violation of the SRO's rules and was the 
subject of an order by the SRO barring or 
suspending the person from membership or 
from association with other members, or 
expelling the person from membership; 
fining the person more than two thousand 
five hundred dollars ($2,500.00); or 
otherwise significantly limiting the person's 
investment-related activities. 



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551 



TEMPORARY RULES 



(c) The information required to be disclosed by 
Subparagraph (a)(T7) shall be disclosed to clients promptly, 
and to prospective clients not less than 48 hours prior to 
entering into any written or oral investment advisory 
contract, or no later than the time of entering into such 
contract if the client has the right to terminate the contract 
without penalty within five business days after entering into 
the contract. 

(d) For purposes of this Rule: 

(1) "Management person" means a person with power 
to exercise, directly or indirectly, a controlling 
influence over the management or policies of an 
investment adviser which is not a natural person or 
to determine the general investment advice given to 
clients; 

(2) "Found" means determined or ascertained by 
adjudication or consent in a final SRO proceeding, 
administrative proceeding, or court action; 

(3^ "Investment-related" means pertaining to securities, 
commodities, banking, insurance, or real estate 
[including, but not limited to, acting as or being 
associated with a dealer, investment company, 
investment adviser, government securities broker or 
dealer, municipal securities dealer, bank, savings 
and loan association, entity or person required to be 
registered under the Commodity Exchange Act (7 
U.S.C. 1 et seq.), or fiduciary]; 

(4) "Involved" means acting or aiding, abetting, 
causing, counseling, commanding, inducing, 
conspiring with or failing reasonably to supervise 
another in doing an act; and 

(5) "Self-Regulatory Organization" or "SRO" means 
any national securities or commodities exchange, 
registered association, or registered clearing 
agency. 

(e) For purposes of calculating the ten-year period during 
which events are presumed to be material under Paragraph 
(b), the date of a reportable event shall be the date on which 
the final order, judgment, or decree was entered, or the date 
on which any rights of appeal from preliminary orders, 
judgments, or decrees lapsed. 

(f) Compliance with this Rule shall not relieve any 
investment adviser from the obligations of any other 
disclosure requirement under the Act, the rules and 
regulations thereunder, or under any other federal or state 
law. 

History Note: Filed as a Temporary Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30. 1989: 
Authority G.S. 78C-18(b): 78C-30(a): 
Eff. Februan- 1. 1989: 
Amended Eff. September 1. 1995: 
Temporar,' Amendment Eff. October 1. 1997. 

.1802 CUSTODY/CLIENT FUNDS OR SECURITIES 
BY INVESTMENT ADVISERS 

(a) It shall be unlawful for any investment adviser to take 



or have custody of any securities or funds of any client 
unless: 

(1) the investment adviser notifies the administrator in 
writing that the investment adviser has or may have 
custody. Such notification may be given on Form 
ADV; 

(2) the securities of each client are segregated; 

(3) the following conditions are satisfied: 

(A) all client funds are deposited in one or more 
bank accounts containing only clients' funds, 

(B) such account or accounts are maintained in 
the name of the investment adviser as agent 
or trustee for such clients, and 

(C) the investment adviser maintains a separate 
record for each such account showing the 
name and address of the bank where the 
account is maintained, the dates and amounts 
of deposits in and withdrawals from the 
account, and the exact amount of each 
client's beneficial interest in the account; 

(4) immediately after accepting custody or possession 
of funds or securities from any client, the 
investment adviser notifies the client in writing of 
the place where and the manner in which the funds 
and securities will be maintained and subsequently, 
if and when there is a change in the place where or 
the manner in which the funds or securities are 
maintained, the investment adviser gives written 
notice thereof to the client; 

(5) at least once every three months, the investment 
adviser sends each such client an itemized statement 
showing the funds and securities in the investment 
adviser's custody at the end of such period and all 
debits, credits and transactions in the client's 
account during such period; and 

(6) at least once every calendar year, an independent 
certified public accountant verifies all client funds 
and securities by actual examination at a time 
chosen by the accountant without prior notice to the 
investment adviser. A report stating that such 
accountant has made an examination of such funds 
and securities, and describing the nature and extent 
of the examination, shall be filed with the 
administrator within 30 da\s after each such 
examination. 

(b) This Rule shall not apply to an investment adviser also 
registered as a broker-dealer under Section 15 of the 
Securities Exchange Act of 1934 if the broker-dealer is: 

(1) Subject to and in compliance with SEC Rule 15c3-l 
(Net Capital Requirements for Brokers or Dealers y, 
17 C.F.R. 240.15c3-l under the Securities 
Exchange Act of 1934, or 

(2) A member of an exchange whose members are 
exempt from SEC Rule 15c3-l. 17 C.F.R. 
240.15c3-l under the provisions of Paragraph 
(b)(2) thereof, and the broker-dealer is in 
compliance with all rules and settled practices of 



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the exchange imposing requirements with respect to 
financial responsibility and the segregation of funds 
or securities carried for the accounts of customers. 
(c) For purposes of tins Rule, the term "investment 

adviser" shall include an investment adviser covered under 

federal law as defined in G.S. 78C-2(4). 

History Note: Filed as a Temporary Rule Eff. January 2, 

1989. for a Period of 180 Days to Expire on June 30, 1989; 

Authority G.S. 78C-18(a); 78C-18(b); 78C-30(a); 

Eff. February 1. 1989; 

Temporary Amendment Eff. October 1. 1997. 

.1803 AGENCY CROSS TRANSACTIONS 

(a) For purposes of this Rule, "agency cross transaction 
for an advisory client" means a transaction in which a person 
acts as an investment adviser in relation to a transaction in 
which the investment adviser, or any person controlling, 
controlled by, or under common control with such investment 
adviser, including an investment adviser representative, acts 
as a broker for both the advisory client and another person on 
the other side of the transaction. When acting in such 
capacity such person is required to be registered as a dealer in 
this state unless excluded from the definition of "dealer" in 
N.C. Gen. Stat. Section 78A-2(2). 

(b) An investment adviser effecting an agency cross 
transaction for an advisory client shall be in compliance with 
Section 78C-8(a)(3) of the Act if the following conditions are 
met: 

(1) The advisory client executes a written consent 
prospectively authorizing the investment adviser to 
effect agency cross transactions for such client; 

(2) Before obtaining such written consent from the 
client, the investment adviser makes full written 
disclosure to the client that, with respect to agency 
cross transactions, the investment adviser will act 
as broker for, receive commissions from and have a 
potentially conflicting division of loyalties and 
responsibilities regarding both parties to the 
transactions; 

(3) At or before the completion of each agency cross 
transaction, the investment adviser or any other 
person relying on this Rule sends the client a 
written confirmation. The written confirmation 
shall include: 

(A) a statement of the nature of the transaction, 

(B) the date the transaction took place, 

(C) an offer to furnish, upon request, the time 
when the transaction took place, and 

(D) the source and amount of any other 
remuneration the investment adviser received 
or will receive in coiuiection with the 
transaction. 

In the case of a purchase, if the investment adviser was not 
participating in a distribution, or, in the case of a sale, if the 
investment adviser was not participating in a tender offer, the 
written confirmation may state whether the investment adviser 



has been receiving or will receive any other remuneration and 
that the investment adviser will furnish the source and amount 
of such remuneration to the client upon the client's written 
request; 

(4) At least annually, and with or as part of any written 
statement or summary of the account from the 
investment adviser, the investment adviser or any 
other person relying on this Rule sends the client a 
written disclosure statement identifying: 

(A) the total number of agency cross transactions 
during the period for the client since the date 
of the last such statement or summary; and 

(B) the total amount of all commissions or other 
remuneration the investment adviser received 
or will receive in connection with agency 
cross transactions for the client during the 
period; 

(5) Each written disclosure and confirmation required 
by this Rule must include a conspicuous statement 
that the client may revoke the written consent 
required under Subparagraph (b)( 1 ) of this Rule at 
any time by providing written notice to the 
investment adviser; and 

(6) No agency cross transaction may be effected in 
which the same investment adviser recommended 
the transaction to both any seller and any 
purchaser. 

(c) Nothing is this Rule shall be construed to relieve an 
investment adviser or investment adviser representative from 
acting in the best interests of the client, including fulfilling 
his duty with respect to the best price and execution for the 
particular transaction for the client nor shall it relieve any 
investment adviser representative of any other disclosure 
obligations imposed by the Act. 

(d) For purposes of this Rule, the term "investment 
adviser" shall include an investment adviser covered under 
federal law as defined in G.S. 78C-2(4K 

History Note: Filed as a Temporary Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30, 1989; 
Authority G.S. 78C-8(a); 78C-8(f); 78C-18(b); 78C-30(a); 
Eff. February 1, 1989; 
Temporary Amendment Eff October 1. 1997. 

.1804 EXEMPTION/SECTION 78C-8(a)(3)/CERTAIN 
BROKER-DEALERS 

(a) For purposes of this Rule: 

(1) "Publicly distributed written materials" means 
written materials which are distributed to 35 or 
more persons who pay for those materials; and 

(2) "Publicly made oral statements" means oral 
statements made simultaneously to 35 or more 
persons who pay for access to those statements. 
statements: and 

(3) "investment adviser" shall include an investment 
adviser covered under federal law as defined in 
G.S. 78C-2(4). 



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(b) An investment adviser registered as a broker-dealer 
pursuant to Section 15 of the Securities Exchange Act of 1934 
shall be exempt from Section 78C-8(a)(3) of the Act in 
connection with any transaction in relation to which that 
broker-dealer acts as an mvestment adviser: 

(1) solely by means of publicly distributed written 
materials or publicly made oral statements; 

(2) solely by means of written materials or oral 
statements not purporting to meet the objectives or 
needs of specific individuals or accounts; 

(3) solely through the issuance of statistical 
information containing no expressions of opinion as 
to the investment merits of a particular security; or 

(4) any combination of the foregoing services. 

This exemption shall apply only if the materials and oral 
statements disclose that, if the purchaser of the advisory 
communication uses the investment adviser's services in 
connection with the sale or purchase of a security which is a 
subject of the communication, the investment adviser may act 
as principal for its own account or as agent for another 
person. Compliance by the investment adviser with the 
foregoing disclosure requirement shall not relieve it of any 
other disclosure obligations under the Act. 

History Note: Filed as a Temporary Rule Eff. January 2, 

1989. for a Period of 180 Days to Expire on June 30. 1989; 

Authority G.S. 78C-8(f): 78C-30(a); 

Eff. February 1. 1989: 

Temporar,' Amendment Elf. October 1. 1997. 

.1805 PERFORMANCE-BASED COMPENSATION 
EXEMPTION 

(a) For purposes of this Rule: 

(1) "Affiliate" shall have the same definition as in 
Section 2(a)(3) of the federal Investment Company 
Act of 1940; 

(2) "Client's independent agent" means any person 
who agrees to act as an investment advisory client's 
agent in cormection with an advisory contract, but 
does not include: 

(A) The investment adviser relying on this Rule; 

(B) An affiliated person of the investment 
adviser or an affiliated person of an affiliated 
person of the investment adviser including an 
investment adviser representative; 

(C) An interested person of the investment 
adviser; 

(D) A person who receives, directly or 
indirectly, any compensation in cormection 
with the advisory contract from the 
investment adviser, an affiliated person of 
the investment adviser, an affiliated person 
of an affiliated person of the investment 
adviser or an interested person of the 
investment adviser; or 

(E) A person with any material relationship 
between himself (or an affiliated person of 



that person) and the investment adviser (or 
an affiliated person of the investment 
adviser) that exists, or has existed at any 
time during the past two years; 

(3) "Company" means a corporation, partnership, 
association, joint stock company, trust, or any 
organized group of persons, whether incorporated 
or not; or any receiver, trustee in a case under Title 
11 of the United States Code, or similar official or 
any liquidating agent for any of the foregoing, in 
his capacity as such. "Company" shall not include: 

(A) A company required to be registered under 
the federal Investment Company Act of 1940 
but which is not so registered; 

(B) A private investment company (for purposes 
of this Subparagraph (B), a private 
investment company is a company which 
would be defined as an investment company 
under Section 3(a) of the federal Investment 
Company Act of 1940 but for the exception 
from that definition provided by Section 
3(c)(1) of that act); 

(C) An investment company registered under the 
federal Investment Company Act of 1940; or 

(D) A business development company as defined 
in Section 202(a)(22) of the federal 
Investment Company Advisers Act of 1940, 
unless each of the equity owners of any such 
company, other than the investment adviser 
entering into the contract, is a natural person 
or company within the meaning of 
Subparagraph (a)(3) of this Rule; and 

(4) "Interested person" means: 

(A) Any member of the immediate family of any 
natural person who is an affiliated person of 
the investment adviser; 

(B) Any person who knowingly has any direct or 
indirect beneficial interest in, or who is 
designated as trustee, executor, or guardian 
of any legal interest in, any security issued 
by the investment adviser or by a controlling 
person of the investment adviser if that 
beneficial or legal interest exceeds: 

(i) one tenth of one percent of any class 
of outstanding securities of the 
investment adviser or a controlling 
person of the investment adviser; or 

(ii) five percent of the total assets of the 
person seeking to act as the client's 
independent agent; or 

(C) Any person or partner or employee of any 
person who, at any time since the beginning 
of the last two years, has acted as legal 
counsel for the investment advise r , advisor; 
and 

(5) "Investment adviser" shall include an investment 
adviser covered under federal law as defined in 



554 



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TEMPORARY RULES 



G.S. 78C-2(4). 

(b) Notwithstanding Section 78C-8(c)(l) of the Act, an 
investment adviser may enter into, extend or renew an 
investment advisory contract which provides for 
compensation to the investment adviser on the basis of a share 
of capital gains upon or capital appreciation of the funds, or 
any portion of the funds, of the client if the conditions in 
Subparagraphs (c) through (h) of this Rule are met. 

(c) The client entering into the contract must be: 

(1) A natural person or a company who, immediately 
after entering into the advisory contract has at least 
five hundred thousand dollars ($500,000.00) under 
the management of the investment adviser; or 

(2) A person who the investment adviser and its 
investment adviser representatives reasonably 
believe, immediately before entering into the 
contract, is a natural person or a company whose 
net worth, at the time the contract is entered into, 
exceeds one million dollars ($1,000,000.00). 

For purposes of this Rule, the term "net worth" shall have the 
same meaning as that provided by Rule .1313(b)(2). The net 
worth of a natural person may include assets held jointly with 
that person's spouse. 

(d) The compensation paid to the investment adviser with 
respect to the performance of any securities over a given 
period must be based on a formula with the following 
characteristics: 

(1) In the case of securities for which market 
quotations are readily available within the meaning 
of Rule 2a-4(a)(l) under the Investment Company 
Act of 1940, (Definition of "Current Net Asset 
Value" for Use in Computing Periodically the 
Current Price of Redeemable Security), 17 C.F.R. 
270.2a-4(a)(l), the formula must include the 
realized capital losses and unrealized capital 
depreciation of the securities over the period; 

(2) In the case of securities for which market 
quotations are not readily available within the 
meaning of Rule 2a-4(a)(l) under the Investment 
Company Act of 1940, 17 C.F.R. 270.2a-4(a)(l), 
the formula must include: 

(A) the realized capital losses of securities over 
the period; and 

(B) if the unrealized capital appreciation of the 
securities over the period is included, the 
unrealized capital depreciation of the 
securities over the period; and 

(3) The formula must provide that any compensation 
paid to the investment adviser under this Rule is 
based on the gains less the losses (computed in 
accordance with Subparagraphs (1) and (2) of this 
Paragraph) in the client's account for a period of 
not less than one year. 

(e) Before entering into the advisory contract and in 
addition to the requirements of Form ADV, the investment 
adviser must disclose in writing to the client or the client's 
independent agent all material information concerning the 



proposed advisory arrangement, including the following: 

(1) That the fee arrangement may create an incentive 
for the investment adviser to make investments that 
are riskier or more speculative than would be the 
case in the absence of a performance fee; 

(2) Where relevant, that the investment adviser may 
receive increased compensation with regard to 
unrealized appreciation as well as realized gains in 
the client's account; 

(3) The periods which will be used to measure 
investment performance throughout the contract 
and their significance in the computation of the fee; 

(4) The nature of any index which will be used as a 
comparative measure of investment performance, 
the significance of the index, and the reason the 
investment adviser believes that the index is 
appropriate; and 

(5) Where the investment adviser's compensation is 
based in part on the unrealized appreciation of 
securities for which market quotations are not 
readily available within the meaning of Rule 
2a-4(a)(l) under the Investment Company Act of 
1940, 17 C.F.R. 270.2a-4(a)(l), how the securities 
will be valued and the extent to which the valuation 
will be independently determined. 

(f) The investment adviser (and any investment adviser 
representative) who enters into the contract must reasonably 
believe, immediately before entering into the contract, that 
the contract represents an arm's length arrangement between 
the parties and that the client (or in the case of a client which 
is a company as defined in Subparagraph (a)(3) of this Rule, 
the person representing the company), alone or together with 
the client's independent agent, understands the proposed 
method of compensation and its risks. The representative of a 
company may be a partner, director, officer or an employee 
of the company or the trustee, where the company is a trust, 
or any other person designated by the company or trustee, but 
must satisfy the definition of client's independent agent set 
fonh in Subparagraph (a)(2) of this Rule. 

(g) Any person entering into or performing an investment 
advisory contract under this Rule is not relieved of any 
obligations under Section 78C-8(a) or any other applicable 
provision of the Act or any rule or order thereunder. 

(h) Nothing in this Rule shall relieve a client's independent 
agent from any obligation to the client under applicable law. 

History Note: Filed as a Temporary Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30, 1989; 
Authority G.S. 78C-8(b); 78C-8(c)(i); 78C-8(f); 78C-30(a); 
Eff. February 1, 1989; 
Temporary Amendment Eff. October 1. 1997. 

. 1 806 TRANSACTIONS DEEMED NOT TO BE 
ASSIGNMENTS 

For purposes of Section 78C-8(c)(2) of the Act, a 
transaction which does not result in a change of actual control 
or management of an investment adviser or investment 



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555 



TEMPORARY RULES 



adviser covered under federal law is not an assignment. 

Hisiory Note: Filed as a Temporary Rule Eff. January 2, 

1989. for a Period of 180 Days to Expire on June 30, 1989: 

Authority G.S. 78C-8(c)(2): 78C-8(f): 78C-30(a); 

Eff. February 1. 1989: 

Temporary' Amendment Eff. October 7^ 1997. 

.1809 PUBLIC INFORMATION 

Investment advise r r eco r ds filed with the administ r ato r 
shall be classified as p ublic ii ' ifoimation e xc ep t wh ere: 

t4i The administrato r has determined that a claim o r 

judicial action is in pr og r ess o r a claim against o r 

by the administ r ator may r e sult in any judicial 

action o r administ r ative p r oceeding: 
tir) The administrato r is conducting o r has conducted a 

pr ivate investigation p u r suant to G.S. 78C-27 : 
t3j The administ r ato r has determined to conduct an 

administ r ative hearing p rivately p u r suant to G.S. 

70C-30(g): o r 
i^ A statute, r ule o r order otherwise pr ovides. 

History Note: Filed as a Temporary Rule Eff. January 2, 

1989. for a Period of 180 Days to E.xpire on June 30. 1989: 

Authority G.S. 78C-27(a): 78C-30(a): 78C-30(g): 78C-31(c): 

132-1; 132-1.1: 

Eff. February 1. 1989: 

Temporary Repealed Eff. October 1. 1997. 

.1811 FORMS 

For use in compliance with the requirements of the 

provisions of Chapter 78C of the North Carolina General 

Statutes and the rules promulgated thereunder, the following 

forms are available upon request from the Securities Division: 

(1) Uniform Application for Investment Adviser 

Reaistraiion (Form ADV); 



t?) Annual Re p o r t fo r Investment Advise r s Registe r ed 

Unde r the Investment Advise r s Act of 1 9 40 (roiiu 
ADV-S): 

Consent to Service of Process (Form 



Form of Corporate Resolution (Form 



t3)£2} Uniform 

U-2); 
W(3} Uniform 

U-2A); 
fM(4) Uniform Application for Securities Industry' 

Registration or Transfer (Form U-4); 
ffr»(5) Uniform Termination Notice for Securities Industry 

Registration (Form U-5); 
fy>(6) North Carolina Securities Division Investment 

Adviser's Bond (Form NCIAB); 
W(7) Certification of Deposit of Cash or Securities — 

Investment Advisers (Form CDCSTA); 
f9^(8) Consent To Service of Process (For Use By 

Investment Advisers and Investment Adviser 

Representatives Only); 
f+9)£9} Consent To Service of Process (For Use By 

Investment Adviser Representatives Only); and 
tttjllO} Corporate Resolution (For Use By Investment 



Advisers Only). 

History Note: Filed as a Temporary Rule Eff. January 2, 
1989. for a Period of 180 Days to Expire on June 30. 1989; 
Authority G.S. 78C-30(a): 78C-30(b); 
Eff. February I, 1989; 
Amended Eff. September 1. 1990: 
Temporary Amendment Eff. October L. 7997. 



TITLE 21 - OCCUPATIONAL LICENSING 
BOARDS 

CHAPTER 34 - BOARD OF MORTUARY SCIENCE 

Rule-making Agency: Board of Mortuary Science 

Rule Citation: 21 NCAC 34A .0201 

Effective Date: October 1 . 1997 

Findings Reviewed and Approved by: Beecher R. Gray 

Authority for the rule-making: G.S. 90-210.23 (a); 90- 
210.28; 90-210.43(g); 90-210.48; 90-210.67(b).(c),(d).(dl); 
90-2 10. 68 (a) 

Reason for Proposed Action: To set licensing fees and 
penalties within limits established by State Statute. 

Comment Procedures: Interested persons may present 
statements in writing by mail addressed to the North Carolina 
Board of Mortuary Science. PO Box 27368, Raleigh, NC 
27611-7368. 

SUBCHAPTER 34A - BOARD FUNCTIONS 

SECTION .0200 - FEES AND OTHER PAYMENTS 



0201 FEES AND PENALTIES 








(a) Fees for funeral service shall be 


as 


follows: 




Establishment permit 








Application 






$250.00 


Annual renewal 






S150.00 


Late renewal penalty 






SIOO.OO 


Establishment and embalming facil 


JX 




reinspection fee 






SIOO.OO 


Courtesy card 








Application 






S 75.00 


Annual renewal 






S 50.00 


Out-of-state licensee 








Application 






S200.00 


Embalmer, funeral director, funera 


service 




Application. North Carolina 


resident 


SI 50.00 


Application, non-resident 






5200.00 


Annual renewal 








Embalmer 






S 40.00 



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TEMPORARY RULES 



Funeral director 

Total fee, embalmer and funeral 

director, when both are held by same 

person 

Funeral service 

Reinstatement fee 
Resident trainee permit 

Application 

Annual renewal 

Late renewal penalty 
Duplicate license certificate 
Chapel registration 

Application 

Annual renewal 
(b) Fees for crematories shall be as follows: 
License 

Application 

Annual renewal 

Late renewal penalty 
Crematory reinspection fee 
Per-cremation fee 

Late filing or payment penalty for each 
cremation 

Late filing penalty for cremation report, 
per month 
Fees for preneed funeral contract regulation 



$ 40.00 



(c) 
follows: 



Preneed funeral establishment license 

Application 

Annual renewal 

Late renewal penalty 
Preneed sales license 

Application 

Annual renewal 

Late renewal penalty 
Preneed licensee reinspection fee 
Preneed contract filings 

Filing fee for each contract 

Late filing or payment penalty for each 

contract 

Late filing penalty for each 

certificate of performance 

Late filing penalty for annual report 



History Note: Authority G.S. 90-2 10. 23 (a); 90-210.28; 90- 

210.43(g); 90-210.48; 90-210.67(b).(c),(d).(dl); 90- 

210.68(a); 

Eff. September 1, 1979; 

Amended Eff. January 1, 1991; July 1, 1988; January 1, 

1988; October 1. 1983; 

Recodified from 21 NCAC 34 .0123 Eff. February 7, 1991; 

Amended Eff. December 1. 1993; August 2, 1993; May 1, 

1993; July 1, 1991; 

Temporary Amendment Eff. October 1. 1997. 



$ 60.00 


$ 60.00 


$ 50.00 


$ 50.00 


$ 35.00 


S 25.00 


S 25.00 


$150.00 


$100.00 


$400.00 


$150.00 


$ 75.00 


$100.00 


$ 5.00 


S 10.00 


$75.00 


shall be as 


$100.00 


$100.00 


$100.00 


$ 10.00 


$ 10.00 


$ 25.00 


$100.00 


2 18.00 


S 25.00 


$25.00 


$150.00 



CHAPTER 40 - BOARD OF OPTICIANS 

Rule-making Agency: State Board of Opticians 

Rule Citation: 21 NCAC 40 .0108 

Effective Date: November 1, 1997 

Findings Reviewed and Approved by: Beecher R. Gray 

Authority for the rule-making: G.S. 90-246; 90-249(a)(9) 

Reason for Proposed Action: To set licensing fees within 
limits established by State statute. 

Comment Procedures: Interested persons may present 
statements in writing by mail addressed to the State Board of 
Opticians, PO Box 25336, Raleigh, NC 27611-5336. 

SECTION .0100 - LOCATION 

.0108 FEES 

The Board charges the maximum fees allowed by G. S. 9 - 
240. 
Fees charged by the Board shall be as follows: 

Each examination $150.00 

Each initial license % 40.00 

Each renewal of license $ 75.00 

Each license issued to a practitioner of 

another state to practice in this state $175.00 

Each registration of an optical place of 

business $ 35.00 

Each application for registration as an 

optician ry apprentice or intern, and renewals 

thereof $ 25.00 

Each registration of a training 

establishment $ 25.00 

Each license verification requiring file 

search S 10.00 

History Note: Authority G.S. 90-246; 90-249(a)(9); 

Eff. November 1, 1981; 

Amended Eff. February 1, 1989; February 1, 1988; August 1. 

1985; 

Temporary Amendment Eff. November 1. 1997. 

CHAPTER 50 - BOARD OF EXAMINERS OF 

PLUMBING, HEATING AND FIRE 

SPRINKLER CONTRACTORS 

Rule-making Agency: State Board of Examiners of 
Plumbing, Heating and Fire Sprinkler Contractors 

Rule Citation: 21 NCAC 50 .0301, .0306, .0404, .0506. 
.0511, .1102 



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557 



TEMPOILARY RULES 



Effective Date: September 15. 1997 

Findings Reviewed and Approved by: Beecher R. Gray 

Authority for the rule-making: G.S. 87-18; 87-21 (a); 87- 
21 lb) 

Reason for Proposed Action: SB 996 and HB 408 Ratified 
by the North Carolina General Assembly to include the 
licensing of fuel piping contractors within the scope of this 
agency with licenses to be issued April 1. 1998. after 
examination. 

Comment Procedures: Hearing on the permanent rules is 
scheduled for November 19, 1997, at 8:30 a.m. at the offices 
of the Board at 3801 Wake Forest Rd., Suite 201. Raleigh. 
NC. Written comment on the permanent rules will be 
received up to January 1, 1998. 

SECTION .0300 - EXAMINATIONS 

.0301 QUALinCATIONS DETERMINED BY 
EXAMINATION 

(a) In order to determine the qualifications of an applicant, 
the Board shall provide a written examination in the 
following categories: 

Plumbing Contracting, Class I 
Plumbing Contracting, Class II 
Heating, Group No. 1 - Contracting, Class I 
Heating, Group No. 1 - Contracting, Class II 
Heating, Group No. 2 - Contracting, Class I 
Heating, Group No. 3 - Contracting, Class I 
Heating, Group No. 3 - Contracting, Class II 
Fuel Piping 

(b) Each applicant shall be required to read, interpret and 
provide written answers to all parts of the examinations 
required by G.S. 87-21(b), except during oral examinations 
provided pursuant to G.S. 87-21(b). 

(c) Applicants for licensure as a fire sprinkler contractor 
other than pursuant to G.S. 87-21(h) must submit evidence of 
current certification by the National Institute for Certification 
and Engineering Technology (NICET) for Fire Protection 
Engineering Technician, Level III, subfield of Automatic 
Sprinkler System Layout as the prerequisite for licensure. 
Current certification by NICET is in lieu of separate 
examination conducted by the Board. 

Histor\- Note: Authority- G.S. 87-18; 87-21 (a); 87-21 (b); 

Eff. February 1, 1976; 

Readopted Eff. September 29. 1977; 

Amended Eff. Julv 1. 1991; May 1, 1989; August 1, 1982; 

Temporary .Amendment Eff. September 15. 1997. 

.0306 APPLICATIONS: ISSUANCE OF LICENSE 

(a) All applicants for regular examinations shall file an 
application in the office of the executive secretar}' on or 
before the date set out on the examination application form, 



which date shall be no more than 60 days prior to the 
examination. 

(b) Applicants for each plumbing or heating examination 
shall present evidence at the time of application on forms 
provided by the Board to establish two years on-site full-time 
experience in the installation, maintenance, service or repair 
of plumbing or heating systems related to the category for 
which license is sought, whether or not license was required 
for the work performed. One \ear of experience in the design 
or installation of fuel piping is required for fuel piping 
license. Practical experience should directly involve 
plumbing, heating or fuel piping and may include work as a 
field superintendent, project manager. ioume\man. mechanic 
or plant siationars' operator directly involved in the 
installation, maintenance, service or repair of such systems. 
Work as a local government inspector of plumbing or heating 
svstems while qualified by the Code Officials Qualification 
Board, work as a field representative of this Board or work 
by a graduate of an ABET accredited engineering or 
engineering technology program with direct on-site 
involvement with plumbing or heating system construction, 
construction supervision, plant engineering or operation may 
utilize such work as evidence of practical experience: 
pro\ided that Board members and employees may not sit for 
examination during their tenure with the Board. After 
review, the Board may request additional evidence. Up to 
one-half the experience may be in academic or technical 
training directly related to the field of endeavor for which 
examination is requested. The Board shall pro rate part-time 
work of less than 40 hours per week or pan-time academic 
work of less than 15 semester or quarter hours or work which 
involves the kinds of work set out hereafter only part of the 
time. P r actical ex p e r ienc e should di re ctly involve p lumbing 
err — h e ating — syst e ms — and — mar — includ e — wo r k — as — a — ftcW 
su per int e ndent pr oject manag er , jou r n e yman, mechanic o r 
p lant statio n an ' o p e r ato r di r ectly in\ ' olv e d in the installation, 
maintenance, se r vice o r r e p ai r of such systems. — Wo r k as a 
local gove r nment ins p ecto r of p lumbing o r h e aling systems 
while qualified by the Code Officials Qualification Board, 
wo r k as a field repr esentative of this Board o r wo r k by a 
g r aduate of an ABCT acc r edited enginee r ing o r engin e e r ing 



technolog\ ' 



ram with di r ect on-site in\ ' oh"cment with 



pr ogram witn Qi r ect on-site in\ ' oivcment wit 
p lumbing — or — heating — system — const r uction, — const r uction 
su p e r vision, p lant enginee r i n g o r o p e r ation may utilize such 
wo r k as evidence of pr actical ex p e r ience: p r ovided that Boa r d 
membe r s and em p loyees may not sit fo r examination during 
thei r tenu r e with the Boa r d. 

(c) Applicants who obtain a license will receive a 
certificate issued by the Board, bearing the license number 
assigned to the qualif>ing individual. 

(d) Fire Sprinkler contractors will meet experience 
requirements in accordance with NICET examination criteria. 

History Note: Auihorit}- G.S. 87-18; 87-21 (b); 

Eff. February 1. 1976; 

Readopted Eff. September 29. 1977; 

Amended Eff. September 1, 1994; November 1. 1993; April 1. 



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TEMPORARY RULES 



1991; May 1, 1990; 

Temporary Amendment Eff. September 15. 1997. 

.0404 ACTIVE EMPLOYMENT 

(a) In each separate place of business or branch thereof 
operated by a contractor licensed by the Board, there shall be 
on active on-site employment a person licensed in accordance 
with the provisions of G.S. 87, Article 2 and whose duties 
are to supervise all installations falling within his license 
qualification. 

(b) Separate place of business or branch thereof shall mean 
any office or facility of any kind: 

(1) from which plumbing, heating or fire sprinkle r 
business work requiring license is solicited or 
conducted; 

(2) from which plumbing, heating o r fi r e s pr inkle r 
contracts for work requiring license are negotiated 
or entered into; or 

(3) from which requests for plumbing, heating o r fire 
sprinkler wo r k o r service r equiring a lic e nse work 
requiring license are received and accepted. 

(c) A temporary field office facility used solely to conduct 
the plumbing, — heating or fire s pr inkle r business work 
requiring license involved in an existing contract or contracts 
entered into by the main license office and from which no 
new business is solicited or conducted shall not be deemed a 
separate place of business or branch thereof. 

History Note: Authority G.S. 87-18; 87-21 (a)(5); 87- 

21(a)(6); 87-26; 

Eff. February 1. 1976; 

Readopted Eff. September 29. 1977; 

Amended Eff. July 1, 1991; May 1. 1989; 

Temporary Amendment Eff. September 15. 1997. 



performed creates substantial risk of contamination of the 
potable water supply is not a minor repair, replacement or 
alteration. 

(d) (c) Any connection, repair or alteration which if 
poorly performed creates substantial risk of fire or exposure 
to carbon monoxide, open sewage or other gases is not a 
minor repair, replacement or alteration. 

(e) to The failure to enumerate above any specific type of 
repair, replacement or alteration shall not be construed in 
itself to render said repair, replacement or alteration as minor 
within the meaning of G.S. 87-2 1(c). 

History Note; Authority G.S. 87-18; 87-21(a)(l); 87- 

21(a)(5); 87-21 (c); 

Eff. February 1, 1976; 

Readopted Eff. September 29, 1977; 

Amended Eff November 1. 1993; May 1, 1989; April 15. 

1978; February 1. 1978; 

Temporary Amendment Eff. September 15. 1997. 

.0511 FUEL PIPING 

The contracting or installation of fuel piping extending 
from an approved fuel source at or near the premises, which 
piping is used or may be used partly or entirely to supp ly fuel 
to plumbing or heating systems or equipment or which, by its 
installation, may alter or affect the fuel supp ly to plumbing or 
heating systems or equipment within the meaning of G.S. 87- 
21(a) requires either plumbing. Heating Group L. Heating 
Group 2^ Heating Group 3^ or fuel piping license. Class II 
license is restricted to single family detached residential 
dwellings. 

History Note; Authority 87-21 (a); 
Temporary Adoption Eff. September 15. 1997. 



.0506 MINOR REPAIRS AND ALTERATIONS 

(ct) — The connec t ion of a facto r y-installed and ins p ected 
mobile hom e d r ainage system to an existing a p p r oved 
pr emises sewe r system, which pr emis e s s e we r system extends 
f r om th e se p tic tank o r munici p al sewe r system, constitutes a 
mino r r e p air or re p lacemen t . — Th e conn e ction of a facto r y- 
ins t alled mobile hom e wate r system t o an existing ap p roved 
p o t abl e water supply on the p remis e s cons t itutes a mino r 
r e p air or r e p lacement. 

(a) ft^ The initial installation or the subsequent 
replacement of a hot water heater in any structure requires a 
license in plumbing contracting except that the replacement of 
a hot water heater, with no change in fuel or energy source, 
energy use rate, routing or sizing of venting or piping, 
constitutes a minor replacement within the meaning of G.S. 
87-2 1(c). 

(b) fc) The installation of a water purification system 
which interrupts the potable water supply does not constitute 
a minor repair or replacement within the meaning of G.S. 87- 
21(c). 

(c) (ti) Any connection, repair, or alteration which 
requires interruption of the potable water supply and if poorly 



.1102 LICENSE FEES 

(a) Except as set out in this Rule, the The annual license 
fee for statewide p lumbing and h e ating licenses issued by this 
Board in the name of an individual, co rp o r ation, partne r shi p , 
or — business — with — a t r ad e — nam e is seventy-five dollars 
($75.00). 

(b) The annual license fee for p lumbing and hea t ing a 
license licenses limited in sco pe territory to cities or towns of 
less than 10,000 population and issued in the name of an 
individual, cor p oration, p artnership or business with a tr ade 
name is forty-five dollars ($45.00). 

(c) The annual license fee for an a licensed individual who 
is not actively engaged in the business of p lumbing o r heating 
cont r acting requiring license by reason of full-time 
employment as a local government plumbing, heating or 
mechanical inspector and who holds qualifications from the 
Code Officials Qualification Board is fifteen dollars ($15.00). 

(d) The initial application fee for license as a fire sprinkler 
contractor is seventy-five dollars ($75.00). The annual 
license fee for statewide licenses issued to a fire sprinkler 
contractor in the name of an individual, corporation, 
partnership or business with a trade name is two-hundred 



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559 



TEMPORARY RULES 



seventy-five dollars (S275.00). 

(e) The annual license fee for an individual whose 
qualifications are listed as the second or subsequent individual 
on a corporation, partnership, or business with a trade name 
under Paragraphs (a), (b) or (d) of this Rule is ten dollars 
(SIO.OO). 

History Note: Filed as a Temporary- Amendment Eff. 

November 17. 1989 for a period of 77 days to expire on 

February 1, 1990: 

Authority G.S. 87-18: 87-21: 87-22: 

Eff. May 1, 1989: 

Amended Eff. November 1. 1994; July 1. 1991: March 1, 

1990: 

Temporary .Amendment Eff. September 15. 1997. 



560 NORTH CAROLINA REGISTER October 1, 1997 12:7 



APPROVED RULES 



This Section includes the Register Notice citation to Rules approved by the Rules Review Commission (RRC) at its meeting 
of August 21. 1997 pursuant to G.S. 150B-21. 17(a)(1) and reported to the Joint Legislative Administrative Procedure 
Oversight Committee pursuant to G.S. 150B-21.16. The full text of rules are published below when the rules have been 
approved by RRC in a form different from that originally noticed in the Register or when no notice was required to be 
published in the Register. The rules published in full text are identified by an * in the listing of approved rules. Statutory 
Reference: G. S. 150B-21 . 1 7. 

These rules unless otherwise noted, will become effective on the 31st legislative day of the 1998 Short Session of the 
General Assembly or a later date if specified by the agency unless a bill is introduced before the 31st legislative day that 
specifically disapproves the rule. If a bill to disapprove a rule is not ratified, the rule will become effective either on the 
day the bill receives an unfavorable final action or the day the General Assembly adjourns. Statutory reference: G.S. 1508- 
21.3. 



APPROVED RULE CITATION 



REGISTER CITATION TO THE 
NOTICE OF TEXT 



4 


NCAC 


06C 


.0205 


4 


NCAC 


06C 


.0409 


10 


NCAC 


03 R 


.3031* 


10 


NCAC 


03R 


.3033* 


10 


NCAC 


35E 


.0101* 


10 


NCAC 


35E 


.0105 - 


10 


NCAC 


35E 


.0308* 


10 


NCAC 


42J 


.0001* 


10 


NCAC 


42J 


.0004 


12 


NCAC 


11 


.0202 


15A 


NCAC 


02H 


.0225* 


15A 


NCAC 


03M 


.0503 


15A 


NCAC 


03M 


.0506* 


15A 


NCAC 


03M 


.0507 


15A 


NCAC 


03 M 


.0514 


15A 


NCAC 


03O 


.0204* 


15A 


NCAC 


07H 


.1202* 


15A 


NCAC 


07H 


.1205* 


15A 


NCAC 


07K 


.0203* 


19A 


NCAC 


02B 


.0164* 


24 


NCAC 


OIP 


.0103* 



.0106* 



Amended Eff. 9-1-97 



11 
11 
11 
11 
11 
11 
11 
11 
11 
11 
11 
11 
11 
11 
11 



29 NCR 2182 

29 NCR 2182 
08 NCR 459 
08 NCR 459 

30 NCR 2301 
30 NCR 2301 
30 NCR 2302 
30 NCR 2303 
30 NCR 2303 
14 NCR 1136 
27 NCR 2073 
26 NCR 1988 
26 NCR 1990 
26 NCR 1991 
26 NCR 1991 



not required, G.S. 150B-21.5 



11 NCR 918 
11 NCR 918 
11 NCR 923 
26 NCR 1969 
28 NCR 2132 



TITLE 10 - DEPARTMENT OF HUMAN 
RESOURCES 

CHAPTER 3 - FACILITY SERVICES 

SUBCHAPTER 3R - CERTinCATE OF NEED 
REGULATIONS 

SECTION .3000 - PLANNING POLICIES AND NEED 
DETERMINATIONS 

.3031 EQUIPMENT NEED DETERMINATIONS 
(REVIEW CATEGORY H) 

Unless otherwise specified in rules, the need determinations 
for equipment identified in G.S. 131E-176(16)(fl) shall be in 
accordance with the State Medical Facilities Plan as approved 
by the Governor. 



History Note: Authority G.S. 131 £-176(25); 1 31 £-177(1 ); 

131£-183(b): 

Eff. July 1. 1998. 

.3033 OPEN HEART SURGERY SERVICES NEED 
DETERMINATIONS (REVIEW 
CATEGORY H) 

It is determined that there is no need for additional open 
heart surgery services by anyone. 

History Note: Authority G.S. 131 £-176(25); 131£-177(l); 

131£-183(b); 

Eff. Aug ust 1. 1998. 

CHAPTER 35 - FAMILY SERVICES 

SUBCHAPTER 35E - SOCIAL SERVICES BLOCK 



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APPROVED RULES 



GRANT (TITLE XX) 
SECTION .0100 - CONDITIONS OF ELIGIBILITY 

.0101 BASIC ELIGIBILITY CRITERIA 

In addition to the requirements of 10 NCAC 35D .0300, in 
order for an individual to be determined eligible to receive 
ser\'ices funded under the Social Services Block Grant (Title 
XX), it must be established that he is eligible on the basis of 
need as specified in the target population for the services 
requested as set forth in 10 NCAC 35 through 37 and 10 
NCAC 41 through 42 except that for purposes of providing 
child day care services, transportation services, or the 
federally funded sterilization resource item of health support 
services, eligibility must also be determined on the basis of 
his income maintenance or income eligible status. 

History Note: Authority G.S. 1438- 153; 
Eff. July 1. 1983: 

Amended Eff. Max 1. 1990: July 1. 1989: 
Temporary- Amendment Eff. October 21, 1996; 
Amended Eff. Jul\ 1. 1998. 

.0105 MAXIMUM INCOME LEVELS FOR 
SERVICES 

(a) Si.xty Percent of Established Income. An individual 
whose income unit's gross monthly income is less than 60 
percent of the state's established income, adjusted according 
to size of the income unit as defined in Rule .0103 of this 
Section, may be eligible for transportation services or the 
federally funded sterilization resource item of health support 
services funded under the Social Services Block Grant (Title 
XX) if available in the county in which he lives. 

(b) Eighty Percent of Established Income. An individual 
whose income unit's gross monthly income is as much as 60 
percent but less than 80 percent of the state's established 
income, adjusted according to size of the income unit as 
defined in Rule .0103 of this Section, may be eligible for the 
federally funded sterilization resource item of health support 
services if available in the county in which he lives. 

History Note: Authority G.S. 143B-153(2a)b.; 

Eff. July 1. 1983; 

Amended Eff. March 1. 1994; July 1, 1989; October 1. 1987; 

July 1. 1984: 

Temporary Amendment Eff. October 21, 1996; 

Amended Eff. Jul\ 1. 1998. 

.0106 WTTHOLT REGARD TO INCOME STATUS 

Individuals may be determined eligible for the following 
services on the basis of need for the service and without 
regard to their income: 

(1) adoption services; 

(2) adult placement services; 

(3) foster care services for children; 

(4) protective services for adults; 

(5) protective services for children; 



(6) child day care services, transportation services, and 
the federally funded sterilization resource item of 
health support services funded under the Social 
Services Block Grant (Title XX) that are needed in 
conjunction with protective services may be 
provided without regard to income during the first 
12 months that protective services are provided if 
such service is available in the county in which the 
individual lives and the agency has received a 
repon pursuant to G.S. 7A-543 or G.S. 108A-102, 
has initiated protective services in accordance with 
program policies, and has determined that such 
other services are needed to support the provision 
of protective ser\'ices; 

(7) delinquency prevention (including residential care); 

(8) employment and training support ser\'ices 
(including transportation and resource items); 

(9) health support services (including transportation 
and resources for the aging, disabled or 
handicapped but excluding the sterilization resource 
item); 

(10) individual and family adjustment services 
(including camping component); 

(1 1) problem pregnancy (including residential services); 

(12) community living services: 

(13) day care ser%'ices for adults; 

(14) housing and home improvement services (including 
resource items); 

(15) in-home aide services (levels I through IV) as 
described in 10 NCAC 42H .0903 and .0904, 
which is incorporated by reference, including 
subsequent amendments and editions. Copies of 
these Rules may be obtained from the Office of 
Administrative Hearings, Post Office Drawer 
27447, Raleigh, NC 27611-7447, (919) 733-2678, 
at a cost of two dollars and fifty cents (S2.50) for 
up to ten pages and fifteen cents ($.15) for each 
additional page at the time of the adoption of this 
Rule; 

(16) personal and family counseling; 

(17) preparation and delivery of meals; and 

(18) residential treatment for the emotionally disturbed. 

Histor,- Note: Authority G.S. 143B-153(2a)b; 

Eff. July 1, 1983; 

Amended Eff. March 1, 1994; December 1. 1991; May 1, 

1990; July 1, 1989; 

Temporary Amendment Eff. October 21, 1996; 

Amended Eff. Julx 1. 1998. 

SECTION .0300 - SERVICE DEFINITIONS 

.0308 HEALTH SUPPORT SERVICES 

(a) Primar>' Service. Health support services means 
helping individuals and families to recognize health needs 
including those related to alcohol and drug abuse, to cope 
with incapacities and limited functioning resulting from 



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APPROVED RULES 



aging, disability, or handicap and to choose, obtain and use 
resources and mechanisms of support under Medicaid 
(including the early and periodic screening, diagnosis and 
treatment program), medicare, maternal and child health 
programs and from other public or private agencies or 
providers of health services; counseling and planning, as 
appropriate, with individuals, families, and health providers 
to help assure continuity of treatment and the carrying out of 
health recommendations; helping individuals to secure 
admission to medical institutions and children to secure 
admission to other health-related facilities as needed; and 
family plaiming services as described in (b) of this Rule. At 
county option, transportation, when not otherwise available, 
may be provided as necessary to access needed medical and 
health care resources. 

(b) Components. Family planning services to enable 
individuals and families to voluntarily limit the family size or 
to space the children, and to prevent or reduce the incidence 
of births out of wedlock. Such services include educational 
activities, the provision of printed materials, counseling about 
family planning and genetics, and help in utilizing medical 
and educational services available in the community and state. 
Also included are educational services in human sexuality 
appropriate to an individual's emotional and social adjustment 
and physical development. 

(c) Optional Resource Items. 

(1) Medical Services. For individuals who are 
recipient of AFDC, SSI, or protective services or 
whose family income is less than 80 percent of the 
state's established income maximum for social 
services eligibility, payment for medical services 
for nontherapeutic sterilization can be provided. 

(2) Resources for the Aging, Disabled or Handicapped. 
At county option any combination of the following 
resource items may be provided as needed and 
appropriate to enable aging, disabled or 
handicapped individuals to attain or maintain the 
highest level of functioning possible, to promote 
their well-being and to prevent or reduce 
inappropriate institutional care. 

(A) Assistance with communication to enable 
individuals to utilize needed health and 
medical resources and other community 
services and resources through the provision 
of interpreters for the deaf and the provision 
of telephones when not otherwise ayailable 
for the aging, disabled, or handicapped who 
are alone and homebound, or who have a 
health or medical condition which 
necessitates ready access to or frequent use 
of a telephone in their home. 

(B) Mobility assistance for aging, disabled and 
handicapped persons, through the installation 
of ramps, rails and other safety measures at 
the individual's home and the provision of 
escort service to health facilities and other 
needed resources for individuals unable to 



travel or wait alone. 

(C) Arranging for or providing friendly visitors 
or companions for part of a day to assist 
individuals who, because of frailty, physical 
or mental disability, or social isolation, have 
limited contacts with other people. Such 
companionship service offers mental and 
physical stimulation and provides an 
opportunity for observation as to the need for 
professional help of any kind. 

(D) Provision of special health needs and 
supplies such as ostomy supplies, oxygen, 
bandages, orthopedic and other appliances 
needed by aging and disabled individuals in 
their own homes and not available through 
Medicaid, Medicare or resources without 
cost. 

(d) Target Population: 

(1) This service is for individuals or families 
experiencing health related problems. 

(2) The family planning component is for individuals 
(male or female) who are of age to produce 
children. 

History Note: Authority G.S. MSB- 153; 

Ejf. February 8, 1977; 

Amended Eff. March 1, 1983; September 1. 1982; March 1. 

1982; October 1, 1979; 

Transferred from T10.43D .0212 Eff. July 1, 1983; 

Amended Eff. March 1, 1994; July 1, 1984; 

Temporary Amendment Eff. October 21, 1996; 

Amended Eff. July 1. 1998. 



CHAPTER 42 



INDIVIDUAL AND FAMILY 
SUPPORT 



SUBCHAPTER 42J - HEALTH SUPPORT SERVICES 

.0001 NATURE AND PURPOSE 

(a) The definition of health support services is set forth in 
10 NCAC 35E .0300. 

(b) Medical services (diagnosis, treatment and care) are 
limited to nontherapeutic sterilization. 

History Note: Authority G.S. 143B-153; 

Eff. March 1. 1977: 

ReadoptedEff. October 31. 1977; 

Amended Eff July 1, 1990; July 1. 1984; June 1. 1982; 

September 15. 1978; 

Temporary Amendment Eff. October 21, 1996; 

Amended Eff^July.L 1998. 



TITLE ISA - DEPARTMENT OF ENVIRONMENT, 
HEALTH, AND NATURAL RESOURCES 

CHAPTER 2 - ENVIRONMENTAL MANAGEMENT 



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563 



APPROVED RULES 



SUBCHAPTER 2H - PROCEDURES FOR PERMITS: 
APPROVALS 

SECTION .0200 - WASTE NOT DISCHARGED TO 
SURFACE WATERS 

.0225 CONDITIONS FOR ISSUING GENERAL 
PERMITS 

(a) In accordance with the provisions of G.S. 143- 
215.1(b)(3) and (d), general permits may be developed by the 
Division and issued by the Director for categories of activities 
covered by this Rule. General permits may be written for 
categories of activities that involve the same or substantially 
similar operations, have similar treated waste characteristics, 
require the same limitations or operating conditions, and 
require the same or similar monitoring. In accordance with 
G.S. 143-215. IOC, general permits may be issued for any 
category of animal operation, based on species, number of 
animals, and other relevant factors. Each of the general 
permits shall be issued under G.S. 143-215. 1(d). After 
issuance of a general permit by the Director, persons 
operating facilities described by the general permit may 
request coverage under it, and the Director or his designee 
may gram appropriate certification. All individual operations 
which receive a "Certificate of Coverage" under a general 
permit are permitted under the specific general permit for 
which the coverage was issued. A Certificate of Coverage 
shall mean the approval given to facilities that meet the 
requirements of coverage under the general permit. Persons 
operating facilities covered under general permits developed 
in accordance with this Rule shall be subject to the same 
limits, conditions, management practices, enforcement 
authorities, and rights and privileges as specified in the 
general permit. 

(b) Upon development of a draft general permit, the 
Director shall publicly notice under G.S. 143-215.4 (b)(1) 
and (2), at least 30 days prior to final action, an intent to 
issue the general permit. A one time publication of the notice 
in a newspaper having general circulation in the geographic 
areas affected by the proposed permit shall be required. The 
notice shall provide the name, address and phone number of 
the agency issuing the notice, a brief description of the 
intended action, and a brief description of the procedures for 
the formulation of final determinations, including a 30-day 
comment period and other means by which interested persons 
may comment upon the determinations. 

(c) No provisions in any general permit issued under this 
Rule shall be interpreted as allowing the permittee to violate 
state surface water quality standards, groundwater quality 
standards outside a Compliance Boundary established in 
accordance with 15A NCAC 2L .0107 (b), (c), (e)(2)(A), 
(e)(2)(C), (f)(1), (0(3), (h), (J) and (k), or other applicable 
environmental standards. Construction of new water supply 
wells for human consumption shall be prohibited within 
Compliance Boundaries for facilities covered under general 
permits issued under this Section. General permits issued 
pursuant to this Rule will be considered individual permits 



for purposes of Compliance Boundaries established under 
15A NCAC 2L .0107. 

(d) To obtain an individual certificate of coverage, a 
Notice of Intent to be covered by the general permit must be 
given using forms provided by the Division. Coverage under 
the general permit shall be granted unless the Director makes 
a determination under Paragraph (h) of this Rule that an 
individual permit is required. If all requirements are not met, 
an individual permit application and full application review 
procedure shall be required. 

(e) General permits shall be effective for a term not to 
exceed five years at the end of which the Division may renew 
them. The Division shall satisfy public notice requirements 
prior to renewal of general permits. If the Division chooses 
not to renew a general permit, all operations covered under 
that general permit shall be notified to submit applications for 
individual permits. 

(0 Anyone engaged in activities covered by the general 
permit rules but not permitted in accordance with this Section 
shall be considered in violation of G.S. 143-215.1. 

(g) Any individual covered or considering coverage under 
a general permit may choose to pursue an individual permit 
for any operation covered by this Rule. 

(h) The Director may require any person, otherwise 
eligible for coverage under a general permit, to apply for an 
individual permit by notifying that person that an application 
is required. Notification shall consist of a written description 
of the reason(s) for the decision, appropriate permit 
application forms and application instructions, a statement 
establishing the required date for submission of the 
application, and a statement informing the person that 
coverage by the general permit shall automatically terminate 
upon issuance of the individual permit. Reasons for requiring 
application for an individual permit may include: 

(1) the operation is a significant contributor of 
pollutants to the waters of the state; 

(2) conditions at the permitted site change, altering the 
constituents or characteristics of the wastewater 
such that the operation no longer qualifies for 
coverage under a general permit; 

(3) noncompliance with the general permit; 

(4) noncompliance with Division Rules; 

(5) a change has occurred in the availability of 
demonstrated technology or practices for the 
control or abatement of pollutants applicable to the 
operation; 

(6) a determination that there has been or is the 
potential to have a direct discharge of wastewater, 
sludge or residuals to waters of the state; 

(7) the system has been allowed to deteriorate or leak 
such that it poses an immediate threat to the 
environment. 

(i) General permits or individual certificate of coverages 
may be modified, terminated, or revoked and reissued in 
accordance with the authority and requirements of rules of 
this Section. 



564 



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12:7 



APPROVED RULES 



History Note: Authoriry G.S. 143-215.1; 143-215. 3(a)(1); 

143-215. IOC; 

Temporary Adoption Ejf. Novembers, 1996; 

Temporary Amendment EJf. May 8, 1997; 

Amended Ejf. August L 1998. 

CHAPTER 3 - MARINE nSHERIES 

SUBCHAPTER 3M - FEVFISH 

SECTION .0500 - OTHER FINHSH 

.0506 SNAPPER-GROUPER 

(a) The Fisheries Director may, by proclamation, impose 
any or all of the following restrictions in the fishery for 
species of the snapper-grouper complex listed in the South 
Atlantic Fishery Management Council Fishery Management 
Plan, including subsequent amendments and editions, for the 
Snapper-Grouper Fishery of the South Atlantic Region and 
for sea bass north of Cape Hatteras in order to comply with 
or utilize conservation equivalency to comply with the 
management requirements incorporated in the Fishery 
Management Plan for Sea Bass, including subsequent 
amendments and editions, developed cooperatively by the 
Mid-Atlantic Fishery Management Council and the Atlantic 
States Marine Fisheries Commission: 

(1) Specify size; 

(2) Specify seasons; 

(3) Specify areas; 

(4) Specify quantity; 

(5) Specify means/methods; and 

(6) Require submission of statistical and biological 
data. 

The species of the snapper-grouper complex listed in the 
South Atlantic Fishery Management Council Fishery 
Management Plan for the Snapper-Grouper Fishery of the 
South Atlantic Region is hereby incorporated by reference 
and copies are available at the Division of Marine Fisheries, 
P.O. Box 769, Morehead City, North Carolina 28557 at no 
cost. 

(b) It is unlawful to possess black sea bass less than eight 
inches total length taken south of Cape Hatteras (35 15' N, 
Latitude). 

(c) It is unlawful to possess gag grouper (gray grouper) 
less than 20 inches total length. 

(d) It is unlawful to possess black grouper less than 20 
inches total length. 

(e) It is unlawful to possess red snapper less than 20 inches 
total length. 

(f) It is unlawful to possess red grouper less than 20 inches 
total length. 

(g) It is unlawful to possess yellowfm grouper (fireback 
grouper) less than 20 inches total length. 

(h) It is unlawful to possess scamp less than 20 inches total 
length. 

(i) It is unlawflil to possess yellowmouth grouper less than 
20 inches total length. 



(j) Greater amberjack: 

(1) It is unlawful to possess greater amberjack less than 
36 inches fork length except that persons fishing 
under the bag limit established in Subparagraph (2) 
of this Paragraph may possess a minimum 28 inch 
amberjack. 

(2) It is unlawful to possess more than three greater 
amberjack per person per day. 

(k) Vermilion Snapper: 

(1) It is unlawful to possess vermilion snapper 
(beeliner) less than 12 inches total length except 
that persons fishing under the bag limit established 
in Subparagraph (2) of this Paragraph may possess 
10 inch vermilion snapper. 

(2) It is unlawful to possess more than 10 vermilion 
snapper per person per day taken for non- 
commercial purposes. 

(1) It is unlawful to possess silk snapper (yelloweye 
snapper) less than 12 inches total length. 

(m) It is unlawful to possess blackfin snapper (hambone 
snapper) less than 12 inches total length. 

(n) It is unlawful to possess red porgy (pink or silver 
snapper) less than 12 inches total length. 

(o) Speckled hind (Kitty Mitchell) and Warsaw grouper: 

(1) It is unlawful to sell or offer for sale speckled hind 
or Warsaw grouper. 

(2) It is unlawful to possess more than one speckled 
hind or one Warsaw grouper per vessel per trip. 

(p) Combined Bag Limit for Snapper. It is unlawful to 
possess more than 10 vermilion snappers and 10 other species 
of snappers, of which no more than two may be red snapper, 
taken in any one day unless fishing aboard a vessel holding a 
federal vessel permit for snapper-grouper authorizing the bag 
limit to be exceeded. 

(q) Combined Bag Limit for Grouper: 

(1) It is unlawful to possess more than five grouper 
taken in any one day unless fishing aboard a vessel 
holding a federal vessel permit for snapper-grouper 
authorizing the bag limit to be exceeded. 

(2) Vessels holding a federal permit authorizing the 
bag limit to be exceeded may not possess more than 
one speckled hind or one Warsaw grouper. 

(r) It is unlawful to possess Nassau grouper or jewfish. 
(s) Fish Traps/Pots: 

(1) It is unlawful to use or have on board a vessel fish 
traps for taking snappers and groupers except sea 
bass pots as allowed in Subparagraph (2) of this 
Paragraph. 

(2) Sea bass may be taken with pots that conform with 
the federal rule requirements for mesh sizes and pot 
size as specified in 50 CFR Part 646.2 and 
openings and degradable fasteners specified in 50 
CFR Part 646-22(c)(2)(i) and rules published in 50 
CFR Part 648.144 pertaining to sea bass north of 
Cape Hatteras (35" 15' N Latitude). 

Histor\- Note; Authorit\' G.S. 113-134; 113-182; 113-221; 



12:7 



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October 1, 1997 



565 



APPROVED RULES 



143B-289.4; 

Eff. January 1. 1991; 

Amended Eff. March 1, 1996: September 1, 1991; 

Temporary Amendment Eff. December 23. 1996; 

Amended Eff. Mx L 1998; April 1. 1997. 

SUBCHAPTER 30 - LICENSES, LEASES, 
AND FRANC fflSES 

SECTION .0200 - LEASES AND 
FRANCfflSES 

.0204 MARKING SHELLnSH LEASES AND 
FRANCfflSES 

(a) All shellfish bottom leases, franchises, and water 
column leases shall be marked as follows: 

(1) Shellfish bottom leases and franchises shall be 
marked by: 

(A) Stakes of wood or plastic material at least 
three inches in diameter at the water level 
and extending at least four feet above the 
high water mark. The stakes shall be firmly 
jetted or driven into the bottom at each 
comer. 

(B) Signs displaying the number of the lease or 
franchise and the name of the owner printed 
in letters at least three inches high must be 
firmly attached to each comer stake. 

(C) Supplementary stakes of wood or plastic 
material, not farther apart than 50 yards or 
closer together than 50 feet and extending at 
least four feet above the high water mark, 
must be placed along each boundary, except 
when such would interfere with the use of 
traditional navigation channels. 

(2) Water column leases shall be marked by anchoring 
two yellow buoys, meeting the material and 
minimum size requirements specified in 15 A 
NCAC 3J .0103(b) at each comer of the area or by 
larger buoys, posts and signs as identified and 
approved by the Secretary in the Management Plan. 

(b) Stakes marking areas of management within shellfish 
bottom leases or franchises, as approved in the management 
plan, must conform to Subparagraph (a)(1)(C) of this Rule 
and may not exceed one for each 1,200 square feet. Marking 
at concentrations of stakes greater than one for each 1,200 
square feet constitutes use of the water column and a water 
column lease is required in accordance with G.S. 113-202.1 
orG.S. 113-202.2. 

(c) All areas claimed in filings made pursuant to G.S. 
113-205 as deeded bottoms through oyster grants issued by 
the county clerk of coun or as private bottoms through 
perpetual franchises issued by the Shellfish Commission shall 
be marked in accordance with Paragraph (a) of this Rule, 
except the sign shall include the number of the franchise 
rather than the number of the lease. However, claimed areas 
not being managed and cultivated shall not be marked. 



(d) It is unlawful to fail to remove all stakes, signs, and 
markers within 30 days of receipt of notice from the Secretary 
pursuant to Departmental Rule 15A NCAC IG .0207 that a 
G.S. 1 13-205 claim to a marked area has been denied. 

(e) It is unlawful to exclude or attempt to exclude the 
public from allowable public tmst use of navigable waters on 
shellfish leases and franchises including, but not limited to, 
fishing, hunting, swimming, wading and navigation. 

(0 The Division has no duty to protect any shellfish bottom 
lease, franchise, or water column lease not marked in 
accordance with Paragraph (a) of this Rule. 

History Note: Authority^ G.S. 76-40; 113-134; 113-182; 

113-201: 113-202; 113-202.1; 113-202.2; 113-205; 

143B-289.4: 

Eff. January 1, 1991; 

Amended Eff. September L 1997: March 1. 1994; October 1, 

1992; September 1, 1991. 

CHAPTER 7 - COASTAL MANAGEMENT 

SUBCHAPTER 7H - STATE GUIDELINES 
FOR AREAS OF ENVIRONMENTAL CONCERN 

SECTION .1200 - GENERAL PERMIT FOR 

CONSTRUCTION OF PIERS: DOCKS: AND BOAT 

HOUSES IN ESTUARINE AND PUBLIC 

TRUST WATERS 

.1202 APPROVAL PROCEDURES 

(a) The applicant must contact the Division of Coastal 
Management and complete an application form requesting 
approval for development. The applicant shall provide 
information on site location, dimensions of the project area, 
and his name and address. 

(b) The applicant must provide: 

(1) confirmation that a written statement has been 
obtained signed by the adjacent riparian property 
owners indicating that they have no objections to 
the proposed work; or 

(2) confirmation that the adjacent riparian property 
owners have been notified by certified mail of the 
proposed work. Such notice shall instmct adjacent 
property owners to provide any comments on the 
proposed development in writing for consideration 
by permitting officials to the Division of Coastal 
Management within 10 days of receipt of the 
notice, and, indicate that no response will be 
interpreted as no objection. DCM staff shall 
review all comments and determine, based on their 
relevance to the potential impacts of the proposed 
project, if the proposed project can be approved by 
a General Permit. If DCM staff finds that the 
comments are worthy of more in-depth review, the 
applicant shall be notified that he must submit an 
application for a major development permit. 

(c) Approval of individual projects shall be acknowledged 



566 



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October 1, 1997 



12:7 



APPROVED RULES 



in writing by the Division of Coastal Management and the History Note: Authority G.S. 113A-107(a); 113A-107(b); 

applicant shall be provided a copy of this Section. 113A-1 13(b): 113A-118.1; 113A-124; 

(d) Construction must be completed within 90 days of the Eff. March J. 1984; 

approval of the permit or the permit expires. Amended Eff. August L 1998: January 1. 1990. 

(e) Any modification or addition to the approved project : • ... 
shall require prior approval from the Division of Coastal • 
Management. 

.1205 SPECinC CONDITIONS 

(a) Piers, docks, and boat houses may extend or be located up to a maximum of 400 feet from the normal high water line, or 
the normal water level, whichever is applicable. 

(b) Piers, docks, and boat houses shall not extend beyond the established pier length along the same shoreline for similar use. 
This restriction shall not apply to piers 100 feet or less in length unless necessary to avoid unreasonable interference with 
navigation or other uses of the waters by the public. The length of piers shall be measured from the waterward edge of any 
wetlands that border the water body. 

(c) Piers longer than 200 feet shall be permitted only if the proposed length gives access to deeper water at a rate of at least 
one foot at each 100 foot increment of pier length longer than 200 feet, or if the additional length is necessary to span some 
obstruction to navigation. Measurements to determine pier lengths shall be made from the waterward edge of any coastal 
wetland vegetation which borders the water body. 

(d) Piers and docks shall be no wider than six feet and shall be elevated at least three feet above any coastal wetland substrate 
as measured from the bottom of the decking. 

(e) Any portion of a pier (either fixed or floating) extending from the main structure and six feet or less in width shall be 
considered either a "T" or a finger pier. 

(f) Any portion of a pier (either fixed or floating) greater than six feet wide shall be considered a platform or deck. 

(g) "T"s, finger piers, platforms, and decks of piers on lots with shorelines 100 feet or greater in length shall not exceed a 
combined total area of 400 square feet. The combined total area for lots less than 100 feet shall not exceed four square feet per 
linear foot of shoreline. 

(h) Platforms and decks shall have no more than six feet of any dimension extending over coastal wetlands. 

(i) Boathouses shall not exceed 400 square feet and shall have sides extending no further than one-half the height of the walls 
and only covering the top half of the walls. Measurements of square footage shall be taken of the greatest exterior dimensions. 
Boathouses shall not be allowed on lots with less than 75 linear feet of shoreline. 

(j) Areas enclosed by boat lifts shall not exceed 400 square feet. 

(k) Piers, docks, decks, platforms and boat houses shall be single story. They may be roofed but shall not be designed to 
allow second story use. 

(1) Pier alignments along federally maintained channels must also meet Corps of Engineers regulations for pier construction 
pursuant to Section 10 of the Rivers and Harbors Act. 

(m) Piers, docks, and boat houses shall in no case extend more than 1/4 the width of a natural water body, human-made canal 
or basin. Measurements to determine widths of the water body, human-made canals or basins shall be made from the waterward 
edge of any coastal wetland vegetation which borders the water body. The 1/4 length limitation shall not apply when the 
proposed pier is located between longer piers within 200 feet of the applicant's property. However, the proposed pier shall not 
be longer than the pier head line established by the adjacent piers, nor, longer than 1/3 the width of the water body. 

(n) Piers, docks and boat houses shall not interfere with the access to any riparian property, and shall have a minimum 
setback of 15 feet between any part of the pier and the adjacent property lines extended into the water at the points that they 
intersect the shoreline. The minimum setbacks provided in the rule may be waived by the written agreement of the adjacent 
riparian owner(s), or when two adjoining riparian owners are co-applicants. Should the adjacent property be sold before 
construction of the pier commences, the applicant shall obtain a written agreement with the new owner waiving the minimum 
setback and submit it to the Division of Coastal Management prior to initiating any development of the pier, dock, or boat 
house. The line of division of areas of riparian access shall be established by drawing a line along the channel or deep water in 
front of the property, then drawing a line perpendicular to the line of the channel so that it intersects with the shore at the point 
the upland property line meets the water's edge. Application of this Rule may be aided by reference to the approved diagram in 
Paragraph (q) of this Rule illustrating the rule as applied to various shoreline configurations. Copies of the diagram may be 
obtained from the Division of Coastal Management. When shoreline configuration is such that a perpendicular alignment cannot 
be achieved, the pier shall be aligned to meet the intent of this Rule to the maximum extent practicable. 

(o) Piers, and mooring facilities shall be designed to provide docking space for no more than two boats. 

(p) Applicants for authorization to construct a dock or pier shall provide notice of the permit application to the owner of any 
part of a shellfish franchise or lease over which the proposed dock or pier would extend. The applicant shall allow the lease 
holder the opportunity to mark a navigation route from the pier to the edge of the lease. 



12:7 NORTH CAROLINA REGISTER October 1, 1997 567 



APPROVED RULES 



(q) The diagram shown below illustrates the various shoreline configurations. 





\^ 



R!!'Afi!AN ACCJ^ ARIAS 



' SDCEOf CKANNEi. OR 

nm- VVATtR 
-'■■- S"«OPr8TV U^if. 

8if>AR!A^< UMST 

M,£AN HK;H WAT5R 
VVATS8 




History Note: Authority G.S. 113A-107ia); 113A-107(b): 113A-1 13(b); 113A-118.1; U3A-124; 
Eff. March 1, 1984: 

Amended Eff. December 1. 1991; May 1, 1990; March 1. 1990; 
RRC Objection due to ambiguity Eff. March 18. 1993; 
Amended Eff. August L 1998: April 23. 1993. 



SUBCHAPTER 7K - ACTIVITIES IN AREAS OF 

ENVIRONMENTAL CONCERN WfflCH 

DO NOT REQUIRE A COASTAL AREA 

MANAGEMENT ACT PERMIT 

SECTION .0200 - CLASSES OF MLNOR 

MAINTENANCE AND LMPROVEMENTS 

WTDCH SHALL BE EXEMPTED FROM 

THE CAMA MAJOR DEVELOPMENT 

PERMIT REQLTREMENT 



.0203 PRIVATE BULKHEADS: 
PIERS 
EXEMPTED 



RIPRAP: AND 



(a) The N. C. Coastal Resources Commission hereby 
exempts from the Coastal Area Management Act permit 
requirement work in the estuarine shoreline and public trust 
waters areas of environmental concern necessary to maintain, 
repair, and construct private bulkheads with backfill, and to 
place riprap material along shorelines, and construct piers or 
mooring facilities in waters of North Carolina. This 
exemption is subject to the following conditions and 
limitations: 

(1) The activities exempted by this Rule shall be 
private, non-commercial activities conforming to 
the standards and conditions contained in this Rule. 
This exemption does not apply to development 
associated with multi-unit residential developments 



568 



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October I, 1997 



12:7 



APPROVED RULES 



larger than duplexes or to marinas, commercial 
harbors, community or neighborhood boat access, 
fish houses or similar commercial activities. 

(2) This exemption is applicable only along estuarine 
shorelines void of wetland vegetation types 
described in NCOS 113-229, or where all 
construction is to be accomplished landward of 
such vegetation, or where the pier is elevated above 
said wetlands. 

(3) This exemption only applies to bulkheads, riprap, 
and piers in non-oceanfront areas. 

(4) This exemption does not eliminate the need to 
obtain any other required federal, state, or local 
authorization. 

(5) Before beginning any work under this exemption 
the Department of Environment, Health, and 
Natural Resources representative must be notified 
of the proposed activity to allow on-site review of 
the bulkhead, riprap material, or pier alignment. 
Notification can be by telephone, in person, or in 
writing. Notification must include: 

(A) the name, address, and telephone number of 
landowner and location of work including 
county, nearest community, and water body; 

(B) the dimensions of the proposed pier, 
bulkhead with backfill, or the area 
dimensions to be covered by placement of 
riprap material; 

(C) confirmation that a written statement has 
been obtained, signed by the adjacent 
riparian property owners, indicating that they 
have no objections to the proposed work. 
(These statements do not have to be 
presented at the time of notification of intent 
to perform work, but the permittee must 
make it available to CRC agents at their 
request.) 

(6) The landowner must agree to perform the work 
authorized in this Rule in a manner so as to 
conform with standards for development in the 
estuarine shoreline area of environmental concern. 

(b) Bulkheads and Riprap: Conditions 

(1) The permittee shall maintain structure of areas of 
riprap material authorized in this Rule in good 
condition. 

(2) Bulkhead with backfill, and placement of riprap 
material exempted by this Rule shall be limited to a 
maximum shoreline length of 200 feet. 

(3) The bulkhead backfill and riprap materials must be 
obtained from an upland source. 

(4) No excavation is exempted under this Rule except 
that which may be required for installation of the 
bulkhead wall, deadmen, cables, piles, etc. 

(5) The proposed bulkhead alignment or area for 
placement of riprap material must be staked or 
flagged by the landowner in consultation with, or 
approved by, a state or federal permit officer prior 



to any construction activity. The bulkhead must be 
positioned so as not to extend more than an average 
distance of two feet waterward of the mean high 
water contour; in no place shall the bulkhead be 
more than five feet waterward of the mean high 
water contour. Construction activities must begin 
90 days after approval of the alignment or area. 

(6) The bulkhead must be solid structure constructed of 
treated wood, concrete slabs, metal sheet piles, 
corrugated asbestos sheeting, or similar materials. 
A structure made of organic material, tires, car 
bodies, or similar materials is not considered a 
bulkhead. 

(7) The bulkhead must be structurally tight so as to 
prevent seepage of backfill materials through the 
bulkhead. The bulkhead must be constructed prior 
to any backfilling activities. 

(8) Riprap material must consist of clean rock or 
masonry materials such as marl, brick, or broken 
concrete. Materials such as tires, car bodies, scrap 
metal, paper products, tree limbs, wood debris, 
organic material or similar material are not 
considered riprap. 

(c) Piers: Conditions 

(1) Exemptions for pier construction along natural 
shorelines are available only for lots with shoreline 
lengths 75 feet or greater. Exemptions may be 
used on shorelines in human-made canals and 
basins regardless of shoreline length. 

(2) Piers and mooring facilities must not exceed 100 
feet in total length off-shore; must not be within 
150 feet of the edge of a federally maintained 
channel; must not extend past the four foot mean 
low water contour line (four foot depth at mean low 
water) of the water body; must not exceed six feet 
in width; must not include an enclosed structure; 
and must not interfere with established navigation 
rights of other users of the water body and must 
have a minimum setback of 15 feet between any 
part of the pier and the adjacent property owners' 
areas of riparian access. The line of division of 
areas of riparian access shall be established by 
drawing a line along the channel or deep water in 
front of the properties, then drawing a line 
perpendicular to the line of the channel so that it 
intersects with the shore at the point the upland 
property line meets the water's edge. The four foot 
mean low water restriction shall not apply to piers 
constructed in canals and basins dredged from areas 
above normal high water (NHW) or normal water 
level (NWL). 

(3) This exemption shall not apply to docks and piers 
being built within shellfish franchises or leases 
unless the applicant for authorization to construct 
can provide written confirmation of no objections 
to the proposal from the lessee. 

(4) Piers authorized by this exemption shall be for the 



12:7 



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October 1, 1997 



569 



APPROVED RULES 



exclusive use of the land owner, and shall not 
provide either leased or rented docking space or 
any other commercial services. Piers and mooring 
facilities designed to provide docking space for 
more than two boats shall, because of their greater 
potential for adverse impacts, be reviewed through 
the permitting process, and, therefore, are not 
authorized by this exemption. 

(5) Piers and docks shall in no case extend more than 
1/4 the width of a natural water body, canal or 
basin. Measurements to determine widths of the 
water body, canals or basins shall be made from the 
waterward edge of any coastal wetland vegetation 
which borders the water body. The 1/4 length 
limitation shall not apply when the proposed pier is 
located between longer piers within 200 feet of the 
applicant's property. However, the proposed pier 
shall not be longer than the pier head line 
established by the adjacent piers, nor longer than 
1/3 the width of the water body. 

(6) Any portion of a pier (either fixed or floating) 
extending from the main structure and six feet or 
less in width shall be considered either a "T" or a 
finger pier. 

(7) Any ponion of a pier (either fixed or floating) 
greater than six feet wide shall be considered a 
platform or deck. 

(8) "T"s, finger piers, platforms, and decks of piers 
must not exceed a combined total area of 200 
square feet. 

(9) Platforms and decks shall have no more than six 
feet of any dimension extending over coastal 
wetlands and shall be elevated at least three feet 
above any coastal wetland substrate as measured 
from the bottom of the decking. 

History Note: Authority G.S. 113A-103(5)c; 113A-1 18(a); 
EJf. March 29, 1978: 

Amended Eff. August L 1998: May 3, 1993; December 1, 
1991; Max 1, 1990; July 1, 1987. 



TITLE 19 A - DEPARTMENT OF STATE 
TRANSPORTATION 

CHAPTER 2 - DIVISION OF fflGHWAYS 

SUBCHAPTER 2B - HIGHWAY PLANNING 

SECTION .0100 ■ RIGHT OF WAY 

.0164 USE OF RIGHT OF WAY CONSULTANTS 

(a) Introduction and purpose. The North Carolina 
Department of Transportation maintains a staff capable of 
performing the normal workload for most of the functions 
required for the acquisition of rights of way for our highway 
svstem. However, it is recognized that situations arise and 



certain specific needs exist which can best be met by the use 

of qualified consultants outside the Department. 

This Rule is established for the preparation, execution and 

administration of contracts for right of way acquisition 

services by consultant firms that are over ten thousand dollars 

(SIO.OOO.OO). 

Due to the diversity of contract types, some portions of this 

Rule may not be fully applicable to all situations. The Right 

of Way Branch Manager shall determine when waivers from 

portions of this Rule are justified. Guidelines for 

determining if a waiver is justified shall include: 

(1) Emergency situation exists that affects the health 
and safety of the traveling public. 

(2) Availability of pre-qualified firms willing to 
perform specified work according to the 
Department's schedule. 

(b) The following are incorporated by reference including 
any subsequent amendments or editions: 

(1) General Statute 136-28. 1(f) and General Statute 
130A-444 thru General Statute 130A-451. 

(2) 23 CFR 710-720, FHWA right of way regulations 
which contain some contracting requirements. 

(3) 49 CFR 18.36, USDOT contracting regulations. 
These documents are available for public inspection in the 
office of the Right of Way Branch. Copies may be obtained 
from the Right of Way Consultant Coordinator at a cost of 
five dollars (S5.00) for each document. 

(c) Definitions. The following definitions are for the 
purpose of clarifying and describing words and terms used in 
this Section: 

(1) Right of Way Consultant Coordinator - The 
individual who is assigned the responsibility of 
initialing, negotiating, and administering a contract 
for professional or specialized services. 

(2) Cost per Unit of Work - A method of 
compensations based on an agreed cost per unit of 
work including actual costs, overhead, payroll 
additives and operating margin. 

(3) Cost Plus Fixed Fee - A price based on the actual 
allowable cost, including overhead and payroll 
additives, incurred by the firm performing the work 
plus a pre-established fixed amount for operating 
margin. 

(4) Cost Proposal - A detailed submittal specifying the 
amount of work anticipated and compensation 
requested for the performance of the specific work 
or services as defined by the Depanment. 

(5) Firm - Any private agency, firm, organization, 
business or individual offering qualified right of 
way acquisition services. 

(6) Lump Sum - A fixed price, including cost, 
overhead, payroll additives and operating margin 
for the performance of specific work or services. 

(7) Payroll Burden - Employer paid fringe benefits 
including employer's portion of F.I.C.A., 
comprehensive health insurance, group life 
insurance, unemployment contributions to the 



570 



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APPROVED RULES 



State, vacation, sick leave, holidays, workers' 
compensation and other such benefits. 

(8) Proposal - An offer by a firm to perform specific 
work or services for the Department at specified 
rates of compensation. 

(9) Scope of Work - All services, actions and physical 
work required by the Department to achieve the 
purpose and objectives defined in the contract. 
Such services may include the furnishing of all 
required labor, equipment, supplies and materials 
except as specifically stated. 

(10) Contract Amendment - A written supplement to the 
contract which modifies the terms of an existing 
contract. 

(11) Termination Clause - A contract provision which 
allows the Department to terminate, at its 
discretion, the performance of work, in whole or in 
part, and to make final payment in accordance with 
the terms of the contract. 

(12) Right of Way Consultant Selection Committee - 
The Committee shall consist of the Branch 
Manager, Assistant Branch Manager, Unit Heads, 
and the Right of Way Consultant Coordinator or 
their designated representatives and shall be chaired 
by the Branch Manager. When Federal funds will 
be used as compensation for services to be 
solicited, a representative of the Federal Highway 
Administration shall sit with the Committee but 
shall not be a voting member. 

(d) Application. This Rule shall apply to all contracts for 
right of way acquisition services which cost more than ten 
thousand dollars ($10,000.00) and are obtained by the 
Department of Transportation pursuant to G.S. 136-28(f). 

(e) Pre-qualification of firms. The Department shall 
advertise for firms interested in performing right of way 
acquisition services for the North Carolina Department of 
Transportation when necessitated by its projected workload. 
The advertisement shall be published in the North Carolina 
Purchase Directory, a bi-monthly publication of the N.C. 
Department of Administration. The advertisement shall 
indicate that interested firms must respond by letter to the 
Department indicating their interest within two weeks of the 
date of the advertisement. The response shall include the 
Federal Government's Government Accounting Office Forms 
254 and 255, and copies of the firms latest brochures. 
Additional firms may be considered for pre-qualification at 
any time that the Department recognizes a need based on 
current projected workload for additional pre-qualified firms. 
Evaluation of the firms expressing interest shall be based on 
the following considerations: 

(1) Experience, education, reputation, and required 
certifications of staff in the fields of expertise 
required by the contract including negotiations, 
appraisals, and relocation assistance; 

(2) Number of staff available to perform the services 
required by the contract including negotiations, 
appraisals, and relocation assistance; 



(3) Financial ability to undertake the proposed work; 

(4) The firm's accounting system including ability to 
identify costs chargeable to the project; 

(5) Past performance by the firm on previous Right of 
Way acquisition contracts including meeting the 
time schedule for the work; 

(6) Equipment necessary to perform the required 
services. 

A number of firms sufficient to perform the anticipated 
workload that meet the qualifications in Paragraphs (e)(1) 
through (e)(6) of this Rule shall be designated as pre-qualified 
to perform right of way acquisition services for the North 
Carolina Department of Transportation. The number of pre- 
qualified firms to be maintained on the Department's pre- 
qualified list shall be determined by the Manager of the Right 
of Way Branch. 

(f) Register of pre-qualified firms. The Right of Way 
Consultant Coordinator shall maintain a "Register of Pre- 
Qualified Firms" from whom specific project proposals may 
be solicited to perform right of way acquisition services for 
the North Carolina Department of Transportation - Right of 
Way Branch. 

(g) Request for approval to solicit specific project 
proposals. The Right of Way Consultant Selection 
Committee through the Manager of Right of Way shall 
determine when the need for right of way acquisition services 
exists. Upon determining that a need exists, the Committee 
shall request approval from the Branch Manager to solicit 
proposals for the work. 

The request shall be in writing and shall include the type of 
work and specific justification for the work being performed 
by a consultant firm such as: 

( 1 ) non-availability of manpower, 

(2) lack of expertise, or 

(3) other reasons. 

(h) Solicitations of specific project proposals. Specific 
Project Proposals shall be solicited from all Pre-Qualified 
Firms. Solicitations shall be by direct mailing of plans and 
Specific Project Proposal. 

The Right of Way Consultant Coordinator, upon the approval 
of the Manager of Right of Way, shall prepare the requests 
for proposals. The request shall contain plans and 
information describing the location of the project, types and 
scope of work required, and the time schedule for 
accomplishing the work. 

The solicitation for a Specific Project Proposal shall require 
that all firms shall attend a Scoping Meeting on a specified 
date in order to qualify to submit a Specific Project Proposal 
for consideration. Any firm that does not wish to submit a 
Specific Project Proposal on a particular project shall advise, 
in writing, the Manager of Right of Way of their decision not 
to submit a Specific Project Proposal for that project. 

(i) Selection of firm for specific project contract. The 
Right of Way Consultant Selection Committee shall review 
all responses received to the request for proposals and shall 
select three firms from those indicating interest (except when 
there are fewer than three responses). When several projects 



12:7 



NORTH CAROLINA REGISTER 



October I, 1997 



571 



APPROVED RULES 



are under consideration at the same time, a firm shall be 
selected for each project and two alternates may be selected 
from the entire group, at the discretion of the Selection 
Committee. These firms shall be listed in descending order 
of preference based on the Selection Committee's review and 
analysis of all responses. The Committee may elect to 
interview all or part of the firms responding to the request for 
proposal prior to establishing the order of preference. The 
Selection Committee's file shall be documented as to the 
reasons for the selection of a firm. 

In the evaluation of the firms submitting Specific Project 
Proposals, the following factors shall be considered: 

(1 ) The monetary amount of the competitive proposal; 

(2) The firm persormel who are currently available to 
perform right of way acquisition services on the 
specific project and their qualifications; and 

(3) The ability of the firm to complete the work 
according to the Department's schedule. 

Any firm selected to perform Right of Way Services for the 
North Carolina Depanment of Transportation shall be 
required to establish an office at the location of the project. 
This office shall be the location for maintaining all project 
records open for review by appropriate Department 
personnel. 

After the authorization to proceed to negotiations is given by 
the Branch Manager, the Right of Way Consultant 
Coordinator shall notify the firm chosen by the Selection 
Committee. 

(j) Negotiation of specific project contract. Prior to 
receiving a specific project proposal, the Right of Way 
Consultant Coordinator shall prepare an estimate of the cost 
of performing the work in-house. This estimate shall be used 
in evaluating the acceptability of the selected firm's cost 
proposal. 

If considered necessary by the Right of Way Consultant 
Coordinator a meeting with the selected firm may be 
scheduled to discuss the scope of the proposed work. The 
discussions will vary depending upon the firm's familiarity 
with the Department's methods, policies, standards, etc. For 
firms unfamiliar with the Department's requirements, the 
discussions shall include: 

(1) Policies used by the Department for the type and 
scope of work involved; 

(2) A copy of a contract in draft form; 

(3) Methods of payment; 

(4) Procedures for invoicing; 

(5) Standard forms to be used; 

(6) Fiscal requirements; 

(7) Items and services to be provided by the 
Department. 

A representative of the firm shall keep minutes of the 
meeting, have them typed and submit a copy to the Right of 
Way Consultant Coordinator. The minutes shall be reviewed 
for completeness, accuracy and confirmation of mutual 
understanding of the scope of work. The minutes shall be 
approved by the signature of the Right of Way Consultant 
Coordinator and an approved copy shall be returned to the 



firm. 

The firm's competitive cost proposal shall be supported by a 
breakdown of the manhours required to perform each of the 
services contained in the contract and the fixed billable rate 
for each of the classifications of personnel to be utilized. The 
fixed fee must be specifically broken out on the firm's 
specific project cost proposal. The firm's cost proposal must 
also include a detailed breakdown of all non-salary direct 
costs and any sub-contract or fee services. 
Upon receipt of the selected firm's cost proposal, a review 
shall be made. The review shall include a comparison with 
the in-house estimate and is intended to determine both the 
reasonableness of the proposal and areas of substantial 
differences which may require further discussion and 
negotiation. When further negotiations are required, they 
shall be the responsibility of the Right of Way Consultant 
Coordinator. 

The final negotiations shall satisfactorily conclude all 
remaining points of difference and shall consider any 
comments submitted by the External Audit Unit. The Right 
of Way Consultant Coordinator with the concurrence of the 
Manager of Right of Way shall approve the final fee. 
If an acceptable contract cannot be negotiated, negotiations 
shall be terminated, the firm shall be notified in writing and 
the next listed firm shall be contacted to initiate negotiations 
for the work. 

(k) Board of Transportation approval and execution of 
contract. After final negotiations are completed, the firm 
shall execute a minimum of two contract originals and submit 
them to the Consultant Coordinator. 
The Consultant Coordinator shall submit the contract to the 
State Highway Administrator who may consult with the 
Advisory Budget Commission pursuant to G.S. 136-28.1(0- 
The Manager of Right of Way shall submit the proposed 
contract to the Board of Transportation for approval. After 
the Board of Transportation approves the contract, the 
Manager of Right of Way shall execute and return the 
contract to the Right of Way Consultant Coordinator. 
The Right of Way Consultant Coordinator shall transmit one 
original contract to the contracting firm and shall retain one 
in the project file. The Consultant Coordinator shall provide 
each of the following with a copy of the contract: the 
Manager of DOT Program and Policy Branch; DOT Fiscal 
Section; and Federal Highway Administration when federal- 
aid funds are involved. 

(1) Sub-contracting. A contracting firm may sublet 
portions of the work proposed in the contract only upon 
approval of the Right of Way Consultant Coordinator. 
The responsibility for procuring a subcontractor and assuring 
the acceptable performance of the work lies with the prime 
contractor. Also, the prime contractor shall submit the 
proper supporting data to the Contract Administrator for all 
work that is proposed to be sublet. 

(m) Methods of compensation: 
(1) Lump Sum - This method of compensation is 
suitable for contracts where the amount and 
character of required work or services can be 



572 



NORTH CAROLINA REGISTER 



October I, 1997 



12:7 



APPROVED RULES 



(2) 



clearly defined and understood by both the 
Department and the contracting firm. 
Cost Plus Fixed Fee - This method of compensation 
suitable for contracts where the general 



IS 



magnitude of work is known but the scope of work 
or period of performance cannot be defined clearly 
and the Department needs more flexibility in 
expediting the work without excessive amendments 
to the contract. 

(3) Cost Per Unit of Work - This method of 
compensation is suitable for contracts where the 
magnitude of work is uncertain but the character of 
work is known and a cost of the work per unit can 
be determined accurately. 

(4) Cost Plus a Percentage of Cost - This method of 
compensation shall not be used. 

(n) Administration of contract. The administration of the 
contract shall be the responsibility of the Right of Way 
Consultant Coordinator. This shall include the review of 
invoices and recommendation for payment to the Fiscal 
Section. 

(o) Contract Amendments. Each contract shall contain 
procedures for contract modifications and define what 
changes can only be made by means of a contract amendment. 
Any change in the amount of compensation must be 
accomplished by contract amendment. For contracts which 
use federal funds as compensation for services, the contract 
amendment must be approved by the Federal Highway 
Administration. 

(p) Monitoring of work. The responsibility for 
monitoring the work, the schedule and performing reviews at 
intermediate stages of the work shall rest with the Right of 
Way Consultant Coordinator. 

(q) Final payment. When it is determined that the work is 
complete, the final invoice shall be approved by the Right of 
Way Consultant Coordinator and forwarded to the Fiscal 
Section with a recommendation for payment. When the 
contract is terminated by the Department, the final payment 
shall be for that portion of work performed. 

(r) Termination of contracts. All contracts shall include a 
provision for the termination of the contract by the 
Department. Such termination by the Department shall be in 
writing and shall be effective upon receipt by the contracting 
firm. 

History Note: Authority G. S. 136-28. 1 (f); 

Ejf. November 1, 1991; 

Amended Ejf. August L 1998: October 1, 1993; November 2, 

1992. 



TITLE 24 - INDEPENDENT AGENCIES 

CHAPTER 1 - N.C. HOUSING nNANCE AGENCY 

SUBCHAPTER IP - FIRE PROTECTION FUND 

SECTION .0100 - GENERAL INFORMATION 

.0103 TYPES OF ASSISTANCE 

(a) The North Carolina Housing Finance Agency shall use 
program funds to make loans. Loans for smoke detection 
systems shall have an interest rate of 3%-6% and a maximum 
term of 10 years. Loans for sprinkler systems shall have an 
interest rate of 3% and a maximum term of 20 years. The 
interest rate for smoke detection system loans shall be 
determined based on the Fund's selection criteria as outlined 
in Rule .0202 of this Subchapter. 

(b) The maximum loan amounts shall be calculated as 
defined in G.S. 122A-5.13. 

(c) Loans shall be amortizing. Loans to the same facility 
that in aggregate total twenty-five thousand dollars ($25,000) 
or more shall be secured by a note and deed of trust. Loans 
to the same facility that in aggregate total less than twenty- 
five thousand dollars ($25,000) shall be secured by a note, 
unless the North Carolina Housing Finance Agency 
determines that the borrower may be unable to repay the note. 
Upon such determination the North Carolina Housing 
Finance Agency may require a deed of trust or other security 
in addition to the note. These loan documents shall provide 
for the acceleration of the debt in the event that a facility 
becomes subject to a negative administrative action by the 
North Carolina Division of Facility Services or the United 
States Health Care Financing Administration that would cause 
revocation of licensure or, in the event that the borrower fails 
to make timely payments. 

(d) The North Carolina Housing Finance Agency shall 
charge a loan origination fee and a servicing fee to reimburse 
actual costs. The servicing fee shall not exceed % of 1% of 
the loan balance. 

History Note: Authority G.S. 122A-5; 122A-5.1; 122A- 

5.13; 

Temporary Adoption Eff. October 1. 1996; 

Eff. August 1. 1998. 



12:7 



NORTH CAROLINA REGISTER 



October I, 1997 



573 



RULES REVIEW COMMISSION 



RULES REVIEW COMMISSION MEMBERS 



Appointed by Senate 

Philip O. Redwine - Cliairman 

Vemice B. Howard 

Teresa L. Smallwood 

David Twiddy 

Jim Funderburke 



Appointed by House 

Paul Powell- Vice Chairman 

Steve Rader 

George Robinson 

Anita White 

Mark Garside 



RULES REVIEW COMMISSION MEETING DATES 



October 16, 1997 
November 20, 1997 



December 18, 1997 



RULES REVIEW OBJECTIONS 
COMMERCE 

Credit Union Division 

4 NCAC 6C . 0407 - Business Loans 

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 

Coastal Resources Commission 

15A NCAC 7H .0208 - Use Standards 
15A NCAC 7H .1204 - General Conditions 

Environmental Management 

15A NCAC 2H .0225 - Conditions for Issuing General Permits 
Agency Revised Rule 

N.C. HOUSING nNANCE AGENCY 

24 NCAC IP .0103 - Types of Assistance 
Agency Revised Rule 

HUMAN RESOURCES 

Facility Services 

10 NCAC 3R .3033 - Open Heart Surgery Serxices Need Determinations (Rev. Cat. H) 



Agency Revised Rule 

Social Services Commission 

10 NCAC 42 J .0005 - Funding for Medical Services 

TRANSPORTATION 

Division of Highways 

19A NCAC 2B .0164- Use of Right of Way Consultants 
Agency Revised Rule 



RRC Objection 



RRC Objection 
RRC Objection 



RRC Objection 
Obj. Removed 



RRC Objection 
Obj. Removed 



RRC Objection 
Obj. Cont'd 
Obj. Cont'd 
Obj. Cont'd 
Obj. Cont'd 
Obj. Removed 



RRC Objection 



RRC Objection 
Obj. Removed 



08/21/97 



08/21/97 
08/21/97 



07/17/97 
08/21/97 



07/17/97 
08/21/97 



01/16/97 
02/20/97 
03/20/97 
06/19/97 
07/1 7/97 
08/21/97 



08/21/97 



07/17/97 
08/21/97 



574 



NORTH CAROLINA REGISTER 



October I, 1997 



12:7 



CONTESTED CASE DECISIONS 



This Section contains the full text of some of the more significant Administrative Law Judge decisions along with an 
index to all recent contested cases decisions which are filed under North Carolina 's Administrative Procedure Act. 
Copies of the decisions listed in the index and not published are available upon request for a minimal charge by 
contacting the Office of Administrative Hearings. (919) 733-2698. 



OFFICE OF ADMINISTRATIVE HEARINGS 

Chief Administrative Law Judge 

JULIAN MANN, III 

Senior Administrative Law Judge 
FRED G. MORRISON JR. 

ADMINISTRA TIVE LA W JUDGES 



Brenda B. Becton 
Sammie Chess Jr. 
Beecher R. Gray 



Meg Scott Phipps 

Robert Roosevelt Reilly Jr. 

Dolores O. Smith 



AGENCY 

ADMINISTRATION 

E. Edward Gambill v Deparimem of Adminisiraiion 

ALCOHOLIC BEVERAGE CONTROL COMNCSSION 

Michael's Mini Mart v. Alcotiolic Beverage Control Commission 

Everette Craig Hornbuckle v. Alcoholic Beverage Control Commission 

Saleh Ahmed All Futhah v Alcoholic Beverage Control Commission 

Alcoholic Beverage Control Commission v Fast Fare, Inc. 

Alcoholic Beverage Control Commission v. Mendoza Enterprises, Inc. 

Alcoholic Beverage Control Commission v. Paradise Landing. Inc. 

OFFISS, Inc. v. Alcoholic Beverage Control Commission 

Alcoholic Beverage Control Commission v. AltafHussain 

Alcoholic Beverage Control Commission v. Robert Johnson 

Alcoholic Beverage Control Commission v. Masonboro County Store. Inc 

Daniel Gary Ledbetter v. Alcoholic Beverage Control Commission 

Alcoholic Beverage Control Commission v. Bridgette Dee Williams 

Alcoholic Beverage Control Commission v. Westside Tavern. Inc. 

Alcoholic Beverage Control Commission v Grove Park Inn Resort, Inc. 

CORRECTION 

David M. Boone v. Correction. Div. of Prison Admin Remedy Procedure 

CRIME CONTROL AND PUBLIC SAFETY 

Delia Sherrod v. Crime Victims Compensation Commission 
Beverly McLaughlin v Crime Victims Compensation Commission 
Malcolm W. Fields v Crime Victims Compensation Commission 
Rodney P. Hodge v Crime Victims Compensation Commission 
Billy Steen v. Crime Victims Compensation Commission 
Clifford R. Pulley v. Crime Victims Compensation Commission 

ENVIRONMENT, HEALTH, AND NATURAL RESOURCES 

Linda Collie v Lenoir County Health Department 

Leroy Anderson v County of Moore Department of Health 

E.H. Garner v. New Hanover Health Department 

Peter D. McDowell. Sr. v. New Hanover Health Department 

Riggings Homeowners Assoc, Inc. v. Environment. Health. & Natural Res 

John Ronald Taylor v. Environment. Health, & Natural Resources 

Rick Parker v Pitt County Health Dept /Mr Ernie Nichols 



CASE 




DATE OF 


PUBLISHED DECISION 


NUMBER 


ALJ 


DECISION 


REGISTER CITATION 


97 DOA 0364 


Reilly 


09/10/97 




92 ABC 1601 


Gray 


08/18/97 




93 ABC 0987 


Gray 


08/18/97 




94 ABC 0264 


Gray 


08/18/97 




96 ABC 0483 


Morrison 


06/18/97 




96 ABC 1196 


Gray 


08/26/97 




97 ABC 0031 


Gray 


06/13/97 




97 ABC0118 


Gray 


09/17/97 




97 ABC 0312 


Mann 


07/29/97 




97 ABC 0321 


Gray 


08/25/97 




97 ABC 0432 


Reilly 


09/09/97 




97 ABC 0443 


Gray 


07/08/97 




97 ABC 0576 


Phipps 


09/04/97 




97 ABC 0586 


Phipps 


0-9/17/97 




97 ABC 0706 


Morrison 


09/15/97 


12:07 NCR 609 


97 DOC 0534 


Morrison 


06/16/97 




96 CPS 0300 


Chess 


07/18/97 




97CPS0170 


Phipps 


08/29/97 




97 CPS 0360 


Chess 


09/12/97 




97 CPS 0449 


Reilly 


07/01/97 




97 CPS 0472 


Morrison 


07/23/97 




97 CPS 0523 


Gray 


08/06/97 




96 EHR 0264 


Becton 


07/16/97 




96 EHR 1969 


Morrison 


07/15/97 


12:03 NCR 223 


96 EHR 1972 


Gray 


08/07/97 




96 EHR 2075 


Gray 


08/07/97 




97 EHR 0263 


Reilly 


08/13/97 




97 EHR 0275 


Reilly 


06/09/97 




97 EHR 0470 


Phipps 


07/01/97 





12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



575 



CONTESTED CASE DECISIONS 



AGENCY 



CASE 
NUMBER 



ALJ 



DATE OF 
DECISION 



PUBLISHED DECISION 
REGISTER CITATION 



Environmental Management 

Henry G Dail. Dail Brothers v. EHNR, Environmental Managemeni 



96EHR2104 



Maternal and Child Health 

Evan's Mini Man v EHNR. Maternal & Child Health. Niitrition Svcs Sec. 97 EHR0599 



Solid Waste Management 

Loie J Priddy v Division of Solid Waste Management. EHNR 



96EHR 1838 



Water Quality 

Castle Hayne Steering Committee v, EHNR. Division ot Water Quality 96 EHR 1731 

and 
New Hanover County Water and Sewer District 
RAYCO Utilities. Inc . Briarwood WWTP v, EHNR. Div of Water Quality 97 EHR 0018 

HUMAN RESOLfRCES 

John & Veronica Spearman v Department of Human Resources 96 DHR 1543 

New Beginnings Christian Academy v. Department of Human Resources 96 DHR 1925 

Cindy G Geho v. Office of Administrative Hearings. R Marcus Lodge 97 DHR 0286 

Helen Wyman v. Department of Human Resources 97 DHR 0407 

Linda Rouse Sharp V Department of Human Resources 97 DHR 06 10 

Ocelee Gibson V Department of Human Resources 97 DHR 0658 

Rita Faircloth v Department of Human Resources 97 DHR 0900 

Division of Child Development 

New Hanover Cty. Comm Action v. DHR. Division of Child Development 97 DHR 0921 

Cindy G. Geho v Human Resources, Division of Child Development 97 DHR 0966 

Division of Facility Services 

Ava McKinney v DHR. Division of Facility Services 96 DHR 2061 

Mercy Egbuleonu v. DHR. Facility Svcs. Health Care Personnel Reg Sec, 97 DHR 0172 

Mercy Egbuleonu v Human Resources. Division of Facility Services 97 DHR 0450 

Kizzie Cooper v. DHR. Facility Svcs. Health Care Personnel Registry Sec. 97 DHR 0459 

Maggie J Barnhill v DHR. Facility Svcs. Health Care Pers. Reg Sec 97 DHR 0465 

Emma Faison v DHR. Division of Facility Services 97 DHR 0471 

Patricia Addison v DHR. Facility Svcs. Health Care Personnel Reg Sec, 97 DHR 0521 

Selena Louise Holley v DHR. Facility Svcs. Health Care Persl Reg Sec 97 DHR 0524 

Claudia K, Thomerson V DHR. Facility Svcs. Health Care Pers Reg Sec 97 DHR 0551 

Michelle R Griffin v, DHR. Facility Svcs. Health Care Pers Reg, Sec, 97 DHR 0559 

Deborah L. McBurme v. DHR. Facility Svcs. Health Care Pers Reg. Sec. 97 DHR 0608 

Kelly M. Poole v, DHR. Facility Svcs, Health Care Pers Reg Sec 97 DHR 0629 

Therese Victoria Wilson v, DHR. Fac. Svcs. Health Care Pers. Reg. Sec. 97 DHR 0632 

Helen T. Shokoti v. Human Resources, Division of Facility Services 97 DHR 0653 

Jeri L- Anderson v Human Resources. Division of Facility Services 97 DHR 0659 

Susie A Milsap v, DHR. Facility Svcs, Health Care Pers Reg Sec 97 DHR 0667 
Glenda Christine Taylor v DHR, Facility Svcs. Health Care Pers Reg. Sec. 

Angela D Johnson v DHR. Facility Svcs. Health Care Pers. Reg. Sec. 97 DHR 0723 

Cressie D Mears v, DHR. Division of Facility Services 97 DHR 0793 

Mane Emma Wimbush v DHR. Facility Svcs. Health Care Pers Reg. Sec, 97 DHR 0797 

Jean Rossman v DHR, Facility Svcs, Health Care Pers. Reg, Sec. 97 DHR 0908 

Lorena Barbour v DHR. Facility Svcs. Health Care Pers, Reg. Sec. 97 DHR 0999 

Certificate of Need Section 

Carolina Imaging, Inc/Fayetteville v DHR, Facility Svcs, Cert/Need Sec 96 DHR 1570 

and 
Cumberland Cty Hospital System, Inc., d./b/a Cape Fear Valley Med, Ctr, 

Group Licensure Section 

Jeffreys Family Care #2 v DHR. Facility Svcs, Group Licensure Section 97 DHR 0259 

Division of Medical Assistance 

Dilladys Renee Stover v DHR. Division of Medical Assistance 97 DHR 0560 

Bettye Parson/Tambra Parson v. DHR, Div, of Medical Assistance 97 DHR 0656 

Robert D & Ronda M Staton v. DHR, Div. of Medical Assistance 97 DHR 0660 



Division of Social Senices 

Child Support Enforcement Section 
Dale P Sprinkle v Guilford Child Support Agency. Human Resources 
Steven Van Linker v. Department of Human Resources 
Michael R, Bryant v Department of Human Resources 
David Lee Chamblee Jr, v. Department of Human Resources 
Michael T Swann v Department of Human Resources 
Ted Wayne Lamb v. Department of Human Resources 



Gray 

Phipps 

Morrison 

Mann 

Chess 



Chess 
Reilly 
Chess 
Reilly 
Mann 
Reilly 
Reilly 



Phipps 
Phipps 



Chess 

Becton 

Gray 

Phipps 

Gray 

Gray 

Mann 

Phipps 

Chess 

Gray 

Chess 

Chess 

Phipps 

Chess 

Gray 

Phipps 

97 DHR 0681 

Chess 

Chess 

Phipps 

Smith 

Phipps 



Phipps 



08/27/97 



07/14/97 



06/20/97 



06/30/97 



09/12/97 



09/12/97 
08/22/97 
07/23/97 
08/08/97 
08/28/97 
07/22/97 
08/15/97 



09/10/97 
08/29/97 



07/08/97 

07/16/97 

09/02/97 

06/09/97 

07/30/97 

07/15/97 

07/25/97 

08/28/97 

07/15/97 

07/30/97 

09/02/97 

09/02/97 

08/25/97 

08/20/97 

08/19/97 

08/25/97 

Gray 

08/06/97 

08/21/97 

08/25/97 

09/02/97 

09/11/97 



06/24/97 



Mann 


06/17/97 


Mann 


09/16/97 


Becton 


08/12/97 


Smilh 


09/05/97 



96CRA1171 


Gray 


08/13/97 


96CRA 1250*= 


Becton 


07/11/97 


96 CRA 1252 


Phipps 


08/11/97 


96CRA 1281 


Morrison 


06/16/97 


96CR.'\ 1326 


Chess 


06/04/97 


96 CR.A. 1359 


Gray 


07/10/97 



12:02 NCR 103 



08/29/97 



12:02 NCR 95 



576 



NORTH CAROLINA REGISTER 



October 1, 1997 



12:7 



CONTESTED CASE DECISIONS 



AGENCY 

Jeffrey Grainger v. Department of Human Resources 

Tollie Woods v. Department of Human Resources 

Fred Edward Stafford v Department of Human Resources 

David N. Jarreit v. Department of Human Resources 

Warren S- Olson v. Department of Human Resources 

Stanley A. Watson v. Department of Human Resources 

Michael A. Isom v. Department of Human Resources 

Rafael L. Garcia v Department of Human Resources 

Justm M- Woazeah. Sr. v Department of Human Resources 

Calvin F. Mtzelle v. Department of Human Resources 

Tommy Lee Clark v. Department of Human Resources 

Ander L Garfield v. Department of Human Resources 

Clarence 0. Rains v. Department of Human Resources 

Jeremy Baker v. Department of Human Resources 

Hal C, Morgan. Jr v. Department of Human Resources 

Paul S. Cloninger v. Department of Human Resources 

Edward Stuteville v. Department of Human Resources 

Lee G. Sanders Jr. v. Department of Human Resources 

David Fraizer v. Department of Human Resources 

David Fraizer v. Department of Human Resources 

David Hobson v. Department of Human Resources 

John T Spidell v. Department of Human Resources 

David Scott Jordan v Department of Human Resources 

Lee R. Jones v. Department of Human Resources 

Cecil Hall v. Department of Human Resources 

Neil G- McGilberry v Department of Human Resources 

Dennis Larson v Department of Human Resources 

Eric L. Harrington v Department of Human Resources 

Paul F. Gangemi, Sr v. Department of Human Resources 

Scott M. Rodriguez v Department of Human Resources 

James Withers v Department of Human Resources 

Evalina R. Oxendine v. Department of Human Resources 

Patrick Orlando Crump v. Department of Human Resources 

Ronald L. Hadley v. Department of Human Resources 

Garland M. Jessup v, Guilford County Child Support Enforcement 

Anthony LeMar m v Department of Human Resources 

Walter Hawk v. Department of Human Resources 

Roger G. Foster v Department of Human Resources 

Charlie T. Smith v. Department of Human Resources 

Joseph Davis v. Department of Human Resources 

Joseph Michael Eubanks v Department of Human Resources 

Vonzell Barker v. Department of Human Resources 

Charles F. King v. Department of Human Resources 

A.C. Nash V Department of Human Resources 

Larie Bolton v Department of Human Resources 

Monty G. Co.k v. Randolph County Child Suppop Enforcement Agency 

Steven Van Linker v Department of Human Resources 

Barry Tukes Sr v C S.E. 

Monty G. Cox v Randolph County Child Support Enforcement Agency 

Harriet Tolson v. Department of Human Resources 

Edgar C Lewis. Jr. v. Department of Human Resources 

Willie L Berry v Department of Human Resources 

Tony Orlando Steele v Department of Human Resources 

Carl Locklear v Department of Human Resources 

Tollie Woods v Department of Human Resources 

Charles L. Raynor v. Department of Human Resources 

Robert Walker v Intercept Tax Refunds 

Fred Edward Stafford v Department of Human Resources 

Stanley A. Watson v. Department of Human Resources 

Justin M. Woazeah. Sr v. Department of Human Resources 

William A. Underbill v. Department of Human Resources 

Almiron J. Deis v Department of Human Resources 

Jeremy Baker v. Department of Human Resources 

Alfred Clinton Springs v. Department of Human Resources 

Ander L. Garfield v. Department of Human Resources 

Edward Stuteville v. Department of Human Resources 

Gerald A. Jones v Department of Human Resources 

David Hobson v Department of Human Resources 

Gregory D. Simpson v Department of Human Resources 

Donald Ray Archie v. Department of Human Resources 



CASE 




DATE OF 


PUBLISHED DECISION 


NUMBER 


ALJ 


DECISION 


REGISTER CITATION 


96 CRA 1376 


Reilly 


08/14/97 




% CRA 1348*' 


Morrison 


08/04/97 




% CRA 1407"" 


Reilly 


08/21/97 




96 CRA 1438 


Morrison 


07/10/97 




96 CRA 1440 


Phipps 


09/09/97 




96 CRA 1448*'" 


Reilly 


08/21/97 




96 CRA 1450 


Becton 


07/11/97 




96 CRA 1451 


Becton 


09/11/97 




96 CRA 1452*' 


Chess 


07/22/97 




96 CRA 1476 


Chess 


07/07/97 




96 CRA 1477 


Phipps 


08/13/97 




96 CRA 1479*' 


Morrison 


07/15/97 




96 CRA 1482 


Reilly 


08/21/97 




96 CRA 1491*-° 


Smith 


09/05/97 




96 CRA 1500 


Smith 


09/05/97 




96 CRA 1502 


Becton 


09/11/97 




96 CRA 1507*" 


Mann 


08/13/97 




96 CRA 1515 


Reilly 


09/11/97 




96 CRA 1519*'° 


Chess 


07/18/97 




96 CRA 1520*'° 


Chess 


07/18/97 




96 CRA 1522*" 


Phipps 


07/24/97 




96 CRA 1567 


Smith 


09/05/97 




96 CRA 1673 


Reilly 


07/18/97 




96 CRA 1720*" 


Phipps 


07/10/97 




96 CRA 1749** 


Mann 


07/10/97 




96 CRA 1767*' 


Becton 


07/15/97 




96 CRA 1793 


Chess 


06/17/97 


• 


96 CRA 1794 


Mann 


07/19/97 




96 CRA 1809 


Gray 


08/13/97 




96 CRA 1818"' 


Gray 


06/25/97 




96 CRA 1820 


Reilly 


07/24/97 




96 CRA 1825 


Gray 


09/10/97 




96 CRA 1866*" 


Gray 


08/18/97 




96 CRA 1892 


Reilly 


07/18/97 




96 CRA 1898 


Becton 


07/11/97 




96 CRA 1905 


Smith 


09/05/97 




96 CRA 1943 


Phipps 


08/13/97 




97 CRA 0043 


Phipps 


06/19/97 




97 CRA 0280 


Reilly 


06/16/97 




97 CRA 0436*" 


Phipps 


08/11/97 




97 CRA 0477 


Reilly 


07/18/97 




97 CRA 0620 


Becton 


08/12/97 




97 CRA 0720 


Reilly 


07/30/97 




97 CRA 0788 


Gray 


09/10/97 




96 CSE 1220 


Reilly 


08/21/97 




96 CSE 1235*"' 


Becton 


08/12/97 




96 CSE 1249*= 


Becton 


07/11/97 




96 CSE 1277 


Mann 


07/01/97 




96 CSE 1278*" 


Becton 


08/12/97 




96 CSE 1280 


Reilly 


08/21/97 




96 CSE 1299 


Mann 


08/20/97 




96 CSE 1319 


Gray 


06/25/97 




96 CSE 1337 


Mann 


06/30/97 




96 CSE 1338 


Mann 


07/07/97 




96 CSE 1340*' 


Morrison 


08/04/97 




96 CSE 1382 


Becton 


07/11/97 




96 CSE 1384 


Morrison 


07/24/97 




96 CSE 1406*" 


Reilly 


08/21/97 




96 CSE 1449*" 


Reilly 


08/21/97 




96 CSE 1453*' 


Chess 


07/22/97 




96 CSE 1455 


Mann 


07/18/97 




96 CSE 1456 


Gray 


06/25/97 




96 CSE 1460*-'° 


Smith 


09/05/97 




96 CSE 1473 


Reilly 


08/21/97 




96 CSE 1480*' 


Morrison 


07/15/97 




96 CSE 1508*" 


Mann 


08/13/97 




96 CSE 1512 


Becton 


09/11/97 




96 CSE 1521*" 


Phipps 


07/24/97 




96 CSE 1527 


Reilly 


06/25/97 




96 CSE 1558 


Becton 


07/11/97 





Consolidated Cases. 



12:7 



NORTH CAROLINA REGISTER 



October I, 1997 



577 



CONTESTED CASE DECISIONS 



AGENCY 

John T, Spidell v. Departmeni of Human Resources 

John W Liverman v. Deparimeni of Human Resources 

Vincent L Mariin v Departmeni of Human Resources 

Harlie Leonard Hardison v Department of Human Resources 

David Fraizer v Department of Human Resources 

Golet Holloway, Jr v Department of Human Resources 

Jeffrey Pierce v Department of Human Resources 

Patrick Orlando Crump v. Department of Human Resources 

William C Rivera V Department of Human Resources 

Lenora McCracken v Deparimeni of Human Resources 

Lee R- Jones v Department of Human Resources 

Cecil Hall v Department of Human Resources 

Gregory Mellon v Deparimeni of Human Resources 

Neil G. McGilberry v Deparimeni of Human Resources 

Devin J. Bello v Departmeni of Human Resources 

Scott M- Rodriguez v Department of Human Resources 

James Withers v, Departmeni of Human Resources 

Sean Heitz v. Department of Human Resources 

Nathan S- Lockhart Sr. v. Departmeni of Human Resources 

Scott James Petrill v Department of Human Resources 

Daniel E- Carpenter v Department of Human Resources 

Daniel D. Morse v. Department of Human Resources 

Daryl E Shankle v. Child Support Enforcement Agency 

Jeffrey William Strama v Department of Human Resources 

Joseph Fernandez v. Departmeni of Human Resources 

Tommy L Hines Sr v Forsyth County Child Support Enforcement 

Irvan Jemal Fontenoi v Departmeni of Human Resources 

Pearlie Blakney v. Department of Human Resources 

Leroy Grooms v Department of Human Resources 

Sarah Chambers v Department of Human Resources 

Leroy Grooms v. Department of Human Resources 

Theodore McCleese v Deparimeni of Human Resources 

Gertru Jefferson Ward v Deparimeni of Human Resources 

John C. Henderson v Department of Human Resources 

William A Rogers v Department of Human Resources 

Mark R Kearney v Department of Human Resources 

Michael J, Powell v Department of Human Resources 

Joseph Davis v Departmeni of Human Resources 

James G. Davis v Departmeni of Human Resources 

Randy Gavurnik v Department of Human Resources 

Curtis Leon Mock v Departmeni of Human Resources 

Daniel E Carpenter v Deparimeni of Human Resources 

Juan L, Allen v. Department of Human Resources 

Donald Mac Tipton v Department of Human Resources 

Guy R Auger v Brunswick County Child Support Enforcement 

Andrew J Hough v Deparimeni of Human Resources 

David F Norman v Department of Human Resources 

Carvm Ray Burns v. Department of Human Resources 

Mar F Jones v. Department of Human Resources 

Dennis W Clowers v Departmeni of Human Resources 

Daniel J McDowell v Deparimeni of Human Resources 

Walter McNeil v Deparimeni of Human Resources 

David Hobson v Department of Human Resources 

Jerry Whitley v, Mecklenburg County Child Support Enforcement 

Linda Wade-Hargrove v. Department of Human Resources 

Regina C Sullivan v, Deparimeni of Human Resources 

Ten Lynne Lanier v. Department of Human Resources 



CASE 




DATE OF 


NimffiER 


ALJ 


DECISION 


96 CSE 1566 


Smith 


09/05/97 


96CSE 1568 


Becton 


07/11/97 


96 CSE 1574 


Gray 


08/04/97 


96 CSE 1578 


Becton 


08/25/97 


96 CSE 1610»'° 


Chess 


07/18/97 


96 CSE 1611 


Becton 


07/11/97 


96 CSE 1613 


Mann 


06/30/97 


96 CSE 1614»" 


Gray 


08/18/97 


96 CSE 1622 


Mann 


06/18/97 


96 CSE 1644 


Mann 


06/30/97 


96 CSE 1719*' 


Phipps 


07/10/97 


96 CSE 1750*' 


Mann 


07/10/97 


96 CSE 1764 


Morrison 


09/17/97 


96 CSE 1766*' 


Becton 


07/15/97 


96 CSE 1774 


Phipps 


07/16/97 


96 CSE 1817*' 


Gray 


06/25/97 


96 CSE 1821 


Reilly 


08/21/97 


96 CSE 1909 


Chess 


07/22/97 


96 CSE 1910 


Phipps 


07/16/97 


96 CSE 1914 


Morrison 


07/30/97 


96 CSE 1917*'- 


Phipps 


07/25/97 


96 CSE 1942 


Chess 


08/19/97 


96 CSE 1977 


Becton 


07/11/97 


96 CSE 2043 


Becion 


07/11/97 


96 CSE 2066 


Chess 


08/21/97 


97 CSE 0015 


Reilly 


07/18/97 


97 CSE 0223 


Becton 


07/11/97 


97 CSE 0254 


Phipps 


07/24/97 


97 CSE 0258*" 


Becton 


07/18/97 


97 CSE 0278 


Morrison 


06/16/97 


97 CSE 0297*' 


Becion 


07/18/97 


97 CSE 0353 


Morrison 


08/05/97 


97 CSE 0381 


Chess 


08/22/97 


97 CSE 0408 


Smith 


09/05/97 


97 CSE 0410 


Gray 


06/25/97 


97 CSE 0417 


Reilly 


08/07/97 


97 CSE 0418 


Becton 


08/12/97 


97CSE0435*'> 


Phipps 


08/11/97 


97 CSE 0448 


Gray 


07/28/97 


97 CSE 0454 


Morrison 


08/04/97 


97 CSE 0490 


Mann 


06/17/97 


97 CSE 0501*' = 


Phipps 


07/25/97 


97 CSE 0550 


Smith 


09/05/97 


97 CSE 0564 


Gray 


09/15/97 


97 CSE 0600 


Morrison 


07/18/97 


97 CSE 0615 


Reilly 


08/21/97 


97 CSE 0672 


Gray 


07/28/97 


97 CSE 0751 


Becton 


09/11/97 


97 CSE 0777 


Phipps 


08/28/97 


97 CSE 0944 


Becion 


09/11/97 


97 CSE 0984 


Morrison 


09/10/97 


97 CSE 1324 


Becion 


09/11/97 


97 CSE 1747*' 


Phipps 


07/24/97 


97 CSE 2037 


Reilly 


08/21/97 


97 DCS 0365 


Becton 


07/11/97 


97 DCS 0482 


Becion 


07/18/97 


97 DCS 0738 


Smith 


09/05/97 



PUBLISHED DECISION 
REGISTER CITATION 



INSLIRANCE 

Joseph J Peacock V Department of Insurance 




96 INS 0433 


Becton 


07/25/97 


12:04 NCR 
327 




JUSTICE 

Barbara Carter Irons v DHR. Division of Facility Services 

Imran Ramnarine v Departmeni of Justice. Company Police Program 


97 DOJ 0669 
97 DOJ 2071 


Phipps 
Becton 


08/27/97 
06/11/97 


12:06 NCR 


501 






Alarm Systems Licensing Board 

Kim Brian Phelps v Alarm Systems Licensing Board 
Daniel Joseph Dunne, HI v Alarm Systems Licensing Board 


96 DOJ 1785 

97 DOJ 0868 


Gray 
Phipps 


08/08/97 
09/12/97 










Education and Training Standards Division 

Charles Thomas Ohnmachi. Jr v, Criml Justice Ed.rTraining Stds Comm 

Jon Randolph O'Dell v. CrimL Justice Ed 'Training Stds Comm 

James Haywood Mathews. Jr. v. Criml. Justice Ed. /Training Stds. Comm. 


96 DOJ 0353 
96 DOJ 1466 
96 DOJ 1957 


Phipps 
Phipps 
Reilly 


06/13/97 
09/16/97 
07/31/97 








\ 


578 NORTH CAROLINA REGISTER 


October 1 


, 1997 






12.-: 


'i 



CONTESTED CASE DECISIONS 



AGENCY 

Christopher Lee v Criminal Justice Ed- & Training Standards Comm. 
Steven Wayne Olsen v. Criminal Justice Ed. & Training Standards Comm. 
Joseph Lonnle Wesson v. Criminal Justice Ed & Training Standards Comm 
Frank Arlander Hearne v. CrimI, Justice Ed & Training Sids. Comm. 
Audrey McDonald Rodgers v. Sheriffs' Ed. & Training Stds. Comm. 
William Malcolm Mouriho v. Sheriffs' Ed. & Training Stds Comm. 
Derrick W. Bowens v. Sheriffs' Education &. Training Standards Comm. 
William Wayne McDowell v. Sheriffs' Education & Training Stds. Comm. 

Private Protective Services Board 
Private Protective Services Board v Phillip L. Hanson 
Ronald Anthony Bobeck v. Private Protective Services Board 
Harry A. House v. Private Protective Services Board 

PUBLIC INSTRUCTION 

Nicholas Eirschele. by his parents. Charles & Kathy EIrschele v. Craven 

County Board of Education 
Karen L Holgersen v Department of Public Instruction 
Meridith Kirkpatrick, by her parent, Susan Kirkpatrick and Meridith 

KIrkpatrick, Individually v. Lenoir County Board of Education 
Alexander & Linda Brody & their son, James Brody v. Dare County 

Public Schools 
Brenda Joyce Brooks Lovely v State Board of Education 
Julius O Webb v Hertford County Board of Education 
Karen Clark Ceccato v. Department of Public Instruction 

STATE PERSONNEL 



CASE 




DATE OF 


PUBLISHED DECISION 


NUMBER 


ALJ 


DECISION 


REGISTER CITATION 


97 DOJ 0076 


Morrison 


06/19/97 




97 DOJ 0077 


Phlpps 


08/21/97 






97 DOJ 0136 


Rellly 


08/26/97 


97 DOJ 0137 


ReiUy 


06/10/97 




97 DOJ 0308 


Rellly 


07/31/97 




97 DOJ 0430 


Phlpps 


09/16/97 




97 DOJ 0661 


Smith 


08/29/97 




97 DOJ 0817 


Morrison 


08/22/97 




96 DOJ 0795 


Smith 


06/05/97 




97 DOJ 0476 


Morrison 


06/20/97 




97 DOJ 0727 


Phipps 


09/11/97 




96 EDC 0655 


Mann 


09/02/97 




96 EDC 0808 


Smith 


05/27/97 




96 EDC 0979 


Overby 


06/02/97 




96 EDC 1095 


Creech 


08/25/97 


12:07 NCR 581 


97 EDC 0089 


Morrison 


08/01/97 




97 EDC 0736 


Gray 


09/09/97 




97 EDC 0989 


Smith 


09/16/97 





Brunswick Community College 

Dr. Donald W. Skinner v. Brunswick Community College 

Correction 

Rodney Jones, Paula Hawkins, James McKoy v. Dept. of Correction 
Rodney Jones, Paula Hawkins, James McKoy v. Dept. of Correction 
Rodney Jones, Paula Hawkins, James McKoy v. Dept. of Correction 
Larry Wayne Pruitt, Jr. v. Department of Correction 
William Hershel Bradley v. Franklin Freeman, Supi. Mark Hughes, 

Grant Spicer, Asst. Supt. Wade Hatley, et al. Department of Correction 
Dennis Harrell v. Department of Correction 
Morton Floyd v. New Hanover Department of Correction 
William A. Rich v. Dennis Rowland (Asst Supt.) Wake Corr. Ctr DOC 

Crime Control and Public Safety 

Carroll E. Ward v. State Highway Patrol 

Employment Security Commission 

Broxle J. Nelson v. Employment Security Commission 
Mary H Ranson v. Employment Security Commission 

Human Resources 

Willie D. Parks v. Cherry Hospital, Department of Human Resources 
Robert Tilson Motley v. Department of Human Resources 
Glen Sutton v. Cumberland County Department of Social Services 
Pamela Massey v. Department of Human Resources 
Clifton Dean Hill v Department of Human Resources 
Calvin E, Kaiser v. Southeastern Mental Health Center 
Troy Gaines v. Durham County Mental Health Department 
Edward Percell Eason v. Department of Human Resources 
Lisha Dawn Byrd v Human Resources (Western Carolina Center) 
Antonio A Archibeque v. Barbara D. Whitley, Dir, Stanly County DSS 
DHR, Deaf & Hard of Hearing CNCSD, Evonne Broadnax v. DHR, 
Deaf & Hard of Hearing CNCSD 



97OSP0310 


Phipps 


06/12/97 




96 0SP 1051*" 


Phipps 


08/20/97 




96 0SP 1119*" 


Phipps 


08/20/97 




96 0SP 1120*" 


Phlpps 


08/20/97 




96 0SP 1133 


Gray 


08/11/97 




96 OSP 1604 


Phipps 


06/19/97 




96 OSP 2039 


Chess 


06/18/97 




97 OSP 0152 


Gray 


06/13/97 




97 OSP 0542 


Gray 


09/02/97 




97 OSP 0750 


Mann 


09/16/97 




96 OSP 0378 


Becton 


07/10/97 




97 OSP 0387 


Mann 


07/24/97 




96 OSP 0617 


Phipps 


09/10/97 




96 OSP 0969 


Gray 


08/21/97 




96 OSP 1296 


Gray 


07/17/97 




96 OSP 1927 


Becton 


08/28/97 


12:06 NCR 497 


97 OSP 0007 


Phipps 


06/20/97 


12:02 NCR 107 


97 OSP 0073 


Gray 


08/08/97 




97 OSP 0347 


Mann 


08/05/97 




97 OSP 0363 


Gray 


08/15/97 




97 OSP 0491 


Morrison 


08/28/97 




97 OSP 0663 


Smith 


09/02/97 




97 OSP 0756 


Becton 


09/03/97 





Public Instruction 

Frances Phillips Melott 



Department of Public Instruction 



Transportation 

Frank A. Tice, UI \ 



Department of Transportation 



University of North Carolina 

Boyd S. Taylor v. NC Central University 

Diane Riggsbee-Raynor v. UNC at Chapel Hill 

Darrell J. Hampton v. NC Central University 

William A. Covington v. NC A & T State University 



95 OSP 0907 


Trawick 


06/09/97 






97 OSP 0380 


Mann 


09/05/97 






94 OSP 0363 


Chess 


09/12/97 






96 OSP 0326 


Chess 


06/04/97 


12:01 NCR 


39 


97 OSP 0155 


Mann 


08/11/97 






97 OSP 0686 


Becton 


08/29/97 







12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



579 



CONTESTED CASE DECISIONS 



CASE DATE OF PUBLISHED DECISION 

AGENCY NUMBER AU DECISION REGISTER CITATION 

STATE TREASURER 

Shelby H. Underwood, eial V Trustees Teachers/St Emp Rei Sys. 96 DST 0390 Reilly 08/05/97 

TRANSPORTATION 

Audrey W Harris v. Transportation. Manson/Wheal Conlr.. & Wake Elec. 97 DOT 0566 Gray 07/28/96 



580 NORTH CAROLINA REGISTER October 1, 1997 12:7 



CONTESTED CASE DECISIONS 



STATE OF NORTH CAROLINA 
COUNTY OF DARE 



IN THE OFFICE OF 

ADMINISTRATIVE HEARINGS 

96 EDC 1095 



ALEXANDER AND LINDA BRODY 
and their son, JAMES BRODY 
Petitioners, 



V. 



DARE COUNTY PUBLIC SCHOOLS 
Respondent. 



FINAL DECISION 



This matter was heard before the Honorable William A. Creech, Administrative Law Judge, on April 29, 30, and May 
1, 5, 6, 7, 1997, in Buxton, Dare County, North Carolina. 



APPEARANCES 



For Petitioners: 



Peter W.D. Wright 
Courthouse Commons 
4104 East Parham Road 
Richmond, Virginia 23228 

Stacey B. Bawtinhimer 

700-B McCanhy Boulevard 

Post Office Box 12125 

New Bern, North Carolina 28561-2125 



For Respondent: 



Allison B. Schafer 
Kathleen C. Boyd 
THARRINGTON SMITH 
209 Fayetteville Street Mall 
Post Office Box 1151 
Raleigh, North Carolina 27602-1 



151 



WITNESSES 



Petitioners: 


Dr. Rebecca Felton 




Dr. Carl Richard ("Rick") Ellis 




Mrs. Linda Brodv 




James Brody 


Respondent: 


Ms. Cindy Caruso 




Ms. Stephanie Hinton Gray 




Ms. Karen Folb 




Ms. Karen Folb 




Ms. Betsy Gwinn 




Dr. Wendy Levin 




Dr. Betty Levey 




Mr. Terry Jones 




PRELIMINARY STATEMENT 



12:7 



NORTH CAROLINA REGISTER 



October 1, 1997 



581 



CONTESTED CASE DECISIONS 



1. Zander and Linda Brody bring this action on behalf of their son, James. He was bom June 2, 1982. He is now 
fifteen years old. He has dyslexia. Petitioners alleged that the Dare County Public Schools had failed to provide James with a 
free, appropriate education as required by the Individuals with Disabilities Education Act and the corresponding North Carolina 
Act, N.C.G.S. \\5C-\Q6 et seq. 

2. James Brody is a youngster with a high IQ. In 1991, when he was in the third grade, he was identified as a 
child in need of special education services. From March, 1991 through June, 1996. James received special education services 
from Dare County Public Schools. As a child with dyslexia, James needed remediation in his areas of weakness, reading, 
writing and spelling. 

3. Petitioners alleged that after James left elementary school and entered Cape Hatteras Middle School for the 
sixth grade. Dare County abandoned their efforts to remediate him. Instead, of providing him with remediation of his reading, 
writing and spelling skills deficits. Dare County focused on helping him "compensate" for his dyslexia. Instead of teaching 
James how to read. Dare County suggested providing him with books on tape. Instead of teaching James how to spell. Dare 
County provided a "spell check" program. 

4. Petitioners also alleged that for the next three years, James did not receive remediation of his dyslexia. These 
language-related skill deficits required specialized education that would result in the acquisition of reading, writing, spelling and 
arithmetic skills. James did not receive the specialized services tailored to his unique needs as a child with dyslexia. Because he 
did not receive an appropriate education during these years, James" skills in reading, spelling and written language remained 
severely deficient. He fell further behind his peer group. Subsequent psychological testing by Dare County and two private 
sector experts demonstrated that James' IQ continued to fall steadily, while receiving a "special" education. Between 1991, 1994 
to 1996, his Full Scale IQ declined from 127, to 1 14, and eventually down to 103. 

5. By the seventh grade, his parents realized that time was running out. In the summer before he entered eighth 
grade, the parents sent him to an intensive summer program at Landmark School. At that school, he did receive the remediation 
that he needed. After James returned from Landmark, his skills in reading had improved substantially and his view of himself 
had begun to improve. 

6. Although Dare County was provided with information about what worked for James at Landmark, they did 
make any changes to his educational program. He remained in the generic LD Resource program at the middle school with 
children who had a variety of problems. He did not receive any remediation. In desperation, his parents took him to two experts 
in the field of dyslexia and gifted children with learning disabilities. These experts. Dr. Rebecca Felton and Dr. Rick Ellis, 
evaluated James and concluded that he needed an intensive program of remediation. 

7. In May and June, 1996, James' parents attended two lEP meetings with staff from Dare County Public 
Schools. They brought in the experts who had recently evaluated James. These experts shared their recommendations with the 
Dare County lEP team. The parents asked that their son receive intensive remediation before it was too late. If Dare County 
could not provide him with remediation, the>' asked that Dare County place James in Landmark School where he could recei\e 
remediation. 

8. Dare County advised the experts and the parents that they could not provide James with remediation because 
their program was not set up to do this. They also refused to act on the parents' request to place James in Landmark School 
where he could receive an appropriate education. 

9. In August, 1996, faced with a situation in which their son was about to enter high school without an 
appropriate lEP, the parents requested a Due Process Hearing. In September, 1996, they withdrew James from Dare County 
Public Schools and sent him to Landmark School. For three years, from 1994 through 1996, Petitioners alleged that the Dare 
County Schools developed a series of lEPs that were fatally flawed. The Respondents denied that any of the lEPs were 
defective. Moreover, the Respondent contended that James was provided a free and appropriate public education and that 
private school placement was not necessary. 

Based upon the record proper and the evidence presented, the Court makes the following: 

FINDINGS OF FACT 

10. James Brody entered Kindergarten at Cape Hatteras School in September, 1987. He attended first and second 



582 NORTH CAROLINA REGISTER October L 1997 12:7 



CONTESTED CASE DECISIONS 



grade at The Island Academy, a small private school on Hatteras Island. (Pa. Ex. 58) 

11. In September. 1990, James re-entered Cape Hatteras Elementary Schools for the third grade. He began to 
experience academic problems immediately. (Pa. Ex. 3, Pa. Ex. 58) 

12. Dare County Public Schools was aware as early as 9/20/90 that James was having difficulties in reading and 
written expression, and concentration problems. Early signs of depression and self-esteem problems were first documented in 
the Exceptional Children's Referral Form when James was in the third grade. (Pa. Ex. 3, Pa. Ex. 4) 

13. A Focus of Screening developed by Dare County dated 10/4/90 noted that "Attempts to modify and adjust the 
program for James began as early as 9-4-90. Despite multiple adjustments, James is still having problems. The parents have 
attempted changes/additional assistance with limited results." (Pa. Ex. 3) 

14. An Exceptional Children's Referral dated 2/6/91 noted that James has "difficulty concentrating sometimes, 
deficient in comprehension, reads below grade level, frequent reversals of letters and numbers, achieves below grade level in 
other content areas, disorganized work habits, poor handwriting, and appears depressed when unable to do work." (Pa. Ex. 4) 
Under Communication Skills, school staff checked "difficulty with written expression." (Pa. Ex. 4, p. 2) 

15. On February 13, 1991, Dare County Schools evaluated James for the presence of a learning disability. School 
psychologist Mitchell Bateman found that James" Full Scale IQ was in the Superior Range (Full Scale IQ = 127) In Reading 
and Writing, James was functioning at the beginning of the second grade level although he was in third grade. (Pa. Ex. 7) 

16. On March 6, 1991 , Dare County developed their first lEP for James. This lEP proposed that after one year of 
special education, James' reading level would increase from a 2.2 to a 3.1 grade level as measured by the Brigance Inventory. 
(Pa. Ex. 9) 

17. On March 6, 1992 and June 4, 1992, a year later, new lEPs were developed for James. (Pa. Ex. 12, 17) 

18. On June 4, 1993, Dare County developed another lEP for James' sixth grade year. This lEP failed to include 
objective information about his Present Levels of Performance in reading, spelling and written language. Although the lEP 
stated "His overall reading skills inhibits his ability to complete reading tasks," the lEP failed to include goals or objectives to 
improve his reading skills. 

19. On Februar)' 7, 1994, James was re-evaluated by school psychologist Mitchell Bateman. According to this 
testing, between 1991 and 1994 James' Full Scale IQ dropped from 127 to 1 14. (Pa. Ex. 23). 

20. According to Mr. Bateman's testing, on the Wechsler Intelligence Scale for Children, James' subtest scores 
ranged from the 98th percentile to the 5th percentile. On the Similarities subtest, which measures logical thinking and reasoning 
abilities, James earned a score of 16 (98th percentile). On the Coding subtest that measures visual-motor coordination, 
attentional skills, and short-term memory, James scored at the 5th percentile. (Pa. Ex. 23) 

21. According to the testing by Dare County in 1994, James made little progress in reading. After three years of 
special education, he dropped from the 42"'' to the 27"^ percentile in reading skills as measured by the Letter-Word Identification 
subtest. (Pa. Ex. 23) 

22. According to Dare County's 1994 evaluation, James made little or no progress in spelling. After three years of 
special education, James dropped from the 42"'' to the 8"^ percentile in spelling; he made two months of progress (from the 2.9 to 
the 3.1 grade level), as measured by the Dictation subtest. (Pa. Ex. 23) 

23. According to Dare County's 1994 evaluation, James made little progress in written language skills. After three 
years of special education, James made 6 months of progress (from the 3.6 to the 4.2 grade level) as measured by the Broad 
Written Language composite. His score dropped from the 58 percent to the 16 percent level. (Pa. Ex. 23) 

24. The Individuals with Disabilities Education Act (IDEA) and N.C.G.S. 115C-1 13(f) mandate that schools 
ensure parental participation as part of the lEP team. Goals and objectives must be developed before any placement 
determination is made. 



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25. At the Due Process Hearing, Linda Brody testified that only the Service Delivery Plans were completed at the 
lEP meetings. The school personnel completed all goals and objective sheets before the lEP meeting. The Service Delivery 
Plans state on the form itself that it is "[tjo be completed after the lEP is developed." (Pa. Ex's. 12, 17, 21, 25, 27, 42, 53) 

26. Appendi.x C of 34 CFR 300, Question 42 clarifies when placement decisions should be made. 

Question 42: When must lEP objectives be written — before placement or after placement? 

lEP objectives must be written before placement. Once a child with a disability is placed in a 
special education program, the teacher might develop lesson plans or more detailed 
objectives based on the lEP; however, such plans and objectives are not required to be a part 
of the lEP itself. 

27. On May 31, 1994, three months after the February evaluation, Dare County developed an lEP for James' 
seventh grade year. (Pa. Ex. 27) 

28. The May 31, 1994 lEP developed did not include objective information from Bateman's recent evaluation in 
the "Present Levels of Functioning." The lEP did not include annual goals or short term objectives that addressed James' deficits 
in basic reading skills, writing skills or spelling skills. (Pa. Ex. 27) 

29. The May 31, 1994 lEP did not provide James with remedial instruction in reading, spelling, or written 
language. (Pa. Ex. 27) 

30. In August, 1994, Dr. Kathleen van Hover, a Clinical Psychologist in Washington, D.C., evaluated James. 
Based on her own testing and a review of the earlier testing by Dare County, Dr. van Hover diagnosed James with dyslexia. 
(Pa. Ex. 31, 32, 33) 

31. Dr. van Hover found that James' basic reading skills were at the fourth grade level (25th percentile.) His 
ability to perform basic math calculations was at the third grade level (9th percentile.) His basic writing skills were at the second 
to third grade levels (between the 3rd and 9th percentiles.) (Pa. Ex. 31) 

At that time, James was thirteen years old, the average age for an eighth grader. 
Despite an above average IQ, and despite several years of special education, he was now 
functioning between the second and fourth grades. He was falling further and further behind 
his peer group. 

32. In her evaluation. Dr. van Hover recommended that James receive remediation in the form of "language 
therapy" and/or a "phonics based approach to reading and spelling mastery." (Pa. Ex. 31) 

33. The parents paid for Dr. van Hover's evaluation, which cost $1,000.00. (T2-217) 

34. James' parents provided Dr. van Hover's report and recommendations to Dare County Public Schools in 
September, 1994. (T2-214) 

35. Although Dare County now had new information confirming the severity of James' dyslexia and need for 
specialized remediation, they did not convene an lEP meeting to make changes to his educational program. James did not 
receive any remediation of his dyslexia. (T2-215) 

36. On May 31, 1995, Dare County Public Schools developed an lEP for James' eighth grade year. (Pa. Ex. 42) 

37. The May 31, 1995 lEP did not include objective information about James' Present Levels of Functioning in 
reading, spelling or written language. It did not include goals or objectives to improve James' deficiencies in reading, spelling, 
written language, or math computation. It did not provide for James to receive any remediation or languaae therapy. (Pa. Ex. 
42) 

38. The May 1995 lEP placed James back into the same "LD Resource" program where he had been receiving 
special education services. (Pa. Ex. 42) 



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39. During the summer of 1995, between seventh and eighth grade, James' parents placed him in an educational 
remediation program at Landmark School. The parents paid for the remedial program, which cost approximately $5,500.00. 
(T2-216-217) 

40. Landmark School is a private special education school in Pride's Crossing, Massachusetts that provides 
intensive remediation to children like James who have learning disabilities like dyslexia. 

41. When James entered Landmark School, his Reading skills ranged between the 3.4 to 5.0 grade levels, as 
measured by the Woodcock Reading Mastery Test and the Gray Oral Reading Test. After six weeks of intensive remediation at 
Landmark, his scores in reading had improved substantially. 

42. James attended Cape Hatteras Middle School for the eighth grade. He received no direct instruction or 
remediation of his weaknesses in basic reading, spelling and written language skills. 

43. On April 12, 1996, Dr. Rebecca Felton, a nationally known expert in the field of learning disabilities, 
evaluated James. Dr. Felton reviewed all of the testing and lEPs developed by Dare County. (Pa. Ex. 54, Pa. Ex. 55) 

Based on these tests as well as the results of prior evaluations, I conclude that James 
is a saident correctly identified as having specific reading and written language disabilities or 
dyslexia . . . These problems are due to a combination of weaknesses in the language 
processing skills of phonological awareness and naming. (Pa. Ex. 55) 

44. After reviewing the lEPs developed for James, Dr. Felton concluded that Dare County had not provided James 
with remediation of his deficient skills: 

School and test records indicate that James continued to demonstrate significant deficits 
particularly in basic reading and writing skills in spite of special services for over five years in the 
public schools. Analysis of the Individual Education Plans indicates that much of that time was spent 
on teaching James higher level skills without adequately preparing him in the basic skills (word 
identification, decoding, and spelling.) After a summer of intensive work at Landmark, James did 
show significant improvements in basic reading skills. However, these skills were not reinforced and 
subsequent testing indicates that James has not fully mastered these skills. (Pa. Ex. 54) 

45. Dr. Felton reported that James required a specific program of remediation that she described in detail: 

James requires direct, remedial instruction in basic skills of reading and spelling . . . This 
goal can only be accomplished through direct instruction in reading and writing in reading and 
writing . . . remedial instruction must be on a regular basis (daily or several times weekly) with 
James either individually or in a small group where the other students are working on the same level 
(so the teacher can provide the direct instruction necessary) . . . in an overall language arts 
curriculum designed to meet the needs of students with specific language based learning 
disabilities. The teacher must be well trained in the linguistic aspects of reading and spelling as 
well as the specific methods being used, (emphasis added) (Pa. Ex. 54) 

46. On April 20 and July 25, 1996, Dr. Rick Ellis, Licensed Clinical Psychologist and Certified School 
Psychologist, evaluated James. (Pa. Ex. 56) 

47. Dr. Ellis reported that: 

James' Composite IQ falls within the superior range of intellectual development. This score 
is equal to a percentile rank of 92 (better than 92 percent of students his age) (Pa. Ex. 56) 

48. Dr. Ellis found that James was functioning "significantly below the range that would be expected given his 
ability" in reading and math. He found that James' skills in Dictation were "severely delayed." After he administered the Test of 
Variables of Attention (TOVA), Dr. Ellis diagnosed James with an Attention Deficit Disorder. (Pa. Ex. 56) 

49. On May 30, 1996, Dare County Public Schools held an lEP meeting to develop an lEP for James' ninth grade 



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year. Dr. Rick Ellis and Dr. Rebecca Felton attended this lEP meeting. They provided the lEP Team with the results of their 
testing and their recommendations about what James needed in his special education program. 

50. Several employees of Dare County Public Schools attended the May 30, 1996 lEP meeting, including Arlene 
Ward (guidance counselor). Dr. Bruce Sheppard (principal), Mitchell Bateman (school psychologist), and Karen Folb (LD 
teacher) (Pa. Ex. 57) 

51. During the May 30, 1996 lEP meeting. Dr. Felton and Dr. Ellis advised the lEP team that James needed to 
master basic skills in reading, spelling, and written language. He required direct instruction and remediation. The Dare County 
lEP staff told Dr. Felton, Dr. Ellis, and the parents that Dare County does not provide remediation to students beyond the 
eighth grade. 

52. In a letter to the parents, Dr. Felton discussed the lEP meeting; 

Providing remediation is clearly not a part of the school's philosophy and Ms. Folb 
appears to be unprepared to provide such remediation. Without proper materials and an 
adequately trained teacher, the provision of an extra period each day for remedial instruction 
would be useless. (Pa. Ex. 54) 

53. On May 30, 1996, Mr. and Mrs. Brody asked that Dare County to place their son in Landmark School where 
he could receive remedial instruction. The lEP Committee adjourned the May 30 meeting, without preparing a new lEP or 
addressing the parents' request to place James at Landmark. 

54. Appendix C, Question 55 of CFR Part 300 clarifies questions about the lEP. 

Question: Is it permissible for an agency to have the lEP completed when the lEP meeting begins? 

No. It is not permissible for an agency to present a completed lEP to the parents for their 
approval before there has been a full discussion with the parents of (1) the child's needs for special 
education and related services, and (2) what services the agency will provide to the child. 

55. The June 1 1. 1996 lEP states that "Given individualized instruction by the except teacher in the TFS setting, 
James will ..." Although Mr. And Mrs. Brody were requesting that James be placed in Landmark School, according to the 
Service Delivery Plan, the only settings ever considered were "regular" and "resource" (Pa. Ex. 53) and the school's "Teaching 
for Success" program. 

56. On June 1 1, 1996, Dare County convened another lEP meeting. During this June 11, 1996 lEP meeting, the 
school staff presented the parents with a "draft" lEP. This "draft" lEP did not include James' "Present Levels of Functioning" in 
reading, spelling or written language. It did not include any of the information provided by Dr. Felton and Dr. Ellis at the May 
30 meeting. This "draft" lEP failed to include any goals or objectives to address James' deficits in reading, spelling and written 
language. (Pa. Ex. 53) 

57. The June 1 1 , 1996 lEP did not provide for James to receive direct instruction or remediation in his deficient 
areas of reading, spelling or written language. The lEP reduced James' special education services by half, to five 52-minute 
periods, or less than five hours per week. (Pa. Ex. 53) 

58. During the June 11, 1996 lEP meeting, the parents asked Dare County Public Schools to place James at 
Landmark School where he could receive the remediation that he needed. The lEP team did not directly address this request, 
made no changes to the lEP, and advised the parents that if they wanted to "challenge" any part of the lEP, they should do so in 
writing. (Pa. Ex. 57) 

59. The parents "challenged" the lEP, and wrote on it that they "don't agree." (Pa. Ex. 53, page 2) 

60. On August 6, 1996, Mr. and Mrs. Brody sent a letter to Terry Jones, Director of Exceptional Education for 
Dare County Public Schools. In their letter, the parents re-iterated their position that the proposed lEP did not provide James 
with an appropriate education and asked Mr. Jones to respond to their request to place James at Landmark. School for the 1996- 
1997 academic year. (Pa. Ex. 57) If Dare County was unwilling, then the letter was a request for a due process hearing. 



586 NORTH CAROLINA REGISTER October 1, 1997 12:7 



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61. In their August 6, 1996 letter, the parents wrote: "... if you are willing to grant our request, please let us 
know iminediately so we can begin to make arrangements with Landmark." (Pa. Ex. 57) 

62. On August 16, 1996, Mr. Jones responded that the school would reconvene an lEP committee and/or 
mediation as a means of attempting to reach agreement. He did not respond to their request about Landmark. (Pa. Ex. 58) 

63. On September 1 1 1996, Mr. and Mrs. Brody wrote a letter to the principal of Cape Hatteras High School and 
explained why James was not returning. They stated that that they were withdrawing James from Dare County Public Schools 
and placing him into Landmark School. (Pa. Ex. 59) 

64. The Petitioners filed a preliminary Motion for Summary Judgment. The School Board filed a Response with 
attached affidavits. 

65. A Special Education Due Process Hearing was held in Buxton, North Carolina, The Honorable William A. 
Creech presiding. He heard testimony over a period of six days, April 29, April 30, May 1, May 5, May 6, and May 7, 1997. 

66. At the onset of the Due Process Hearing, Judge Creech advised that he would take the Parents' Motion for 
Summary Judgment under advisement. 

67. After opening statements on April 29, 1997, the first witness to testify at the Due Process Hearing was Dr. 
Rebecca Felton. 

68. Dr. Felton has taught and/or diagnosed students with learning disabilities since graduating from Duke 
University in 1966. Between 1975 and 1995, she worked as a researcher and clinician at the Bowman Gray School of Medicine 
in Winston-Salem. She continues to work as a consultant at the Bowman Gray Schools of Medicine on research and clinical 
issues. Beginning in 1983, Dr. Felton participated in the extensive research on reading disabilities and attention deficit disorder 
sponsored by the National Institutes of Health. (Tl-30) 

69. Dr. Felton testified that she has been involved in developing hundreds of lEPs for students over the past 20 
years. (Tl-96) She has consulted with several school systems about teaching methods to use with children who have reading 
disabilities. (Tl-96) 

70. Dr. Felton described effective instructional practices to use with language based problems. She emphasized 
that with appropriate instruction, "the majority of individuals, even those with severe reading problems, make good progress in 
becoming proficient readers, spellers, and writers." (Tl-36) She reported that although there is no real "cure" for dyslexia, 
"dyslexic readers can be remediated, can function as proficient readers and spellers and writers with appropriate instruction." 

(Tl-37) 

71. Dr. Felton testified about the "Matthew Effect": 

And what that term means is that individuals who have difficulty learning to read, and whose 
reading problems are not remediated effectively early in their school career, often remain significantly 
behind their peers in reading skills ... If an individual fails to learn well in first, second and third 
grade - and first and second grade are really the critical periods - then what happens is that these 
individuals don't read the amount of material that's necessary to continue to develop good reading 
skills. (Tl-45-6) 

72. Dr. Felton defined the use of "remediation" in a child's lEP: 

Remediation simply means an area that a child is deficient in and needs instruction in to 
correct that deficiency, so, to me, that's the essence of what an individual education plan is all about. 
It's all about skills that individuals are deficient in and how we go about developing those skills to the 
point that those individuals can function independently. (Tl-58) 

73. Dr. Felton testified about her initial involvement with James Brody: 

... I was first asked to . . . give an independent assessment of his strengths, weaknesses in 



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reading and writing and lo make, if necessary, recommendations for instruction ... I was first asked 
to review the records and determine if the type of testing that I do would be useful in formulating 
recommendations, which I did. And then I tested him and was asked by his parents to come to a 
meeting ... it was May of '96 - at which my understanding was ... an individual education plan 
was to be developed for him for the coming school year, which would be his ninth-grade year. (Tl- 
59-60) 

74. Dr. Felton described the recommendations she made to the staff at Dare County: 

... the test results that I had obtained, as well as the test results in the past from many 
assessments, indicated the need to include in his individual education plan direct instruction that 
would address his basic skills weaknesses ... I made that statement at the May '96 meeting, initially. 

Q: What else did you tell them that James needed? 

A; At that meeting? 

Q: Uh-huh. 

A: I told them that he would need practice in reading, in using materials that were 

appropriate for his reading level so that he could develop fluency: that would also need direct 
instruction in all aspects of writing, because that was clearly a very deficient area for him ... it was 
a combination of direct remediation of skills he was still deficient in, as well as strategies, as well as 
modifications. (T 1-60-61) 



Q: 'When you attended the lEP meeting in Dare County, you told them that James 

needed remediation; am I understanding that correctly? 

A: That is correct. 

Q: And what did they tell you about remediation? 

A: The strong, often-repeated statements, both by Ms. Fold and by the school 

psychologist, were that the emphasis, the strong emphasis in high school is on giving a student the 
support the student needs to be successful in content classes and not on remediation. In fact, the 
statement was made by the school psychologist that one has to make a choice in high school. The 
choice has to be between giving the student the help they need to pass the content courses so they can 
graduate on time or tn,-ing to continue to remediate . . . (T 1-62-63) 

75. Dr. Felton was asked about LD Teacher Folb's assertions in her affida\it that she could provide James with 
remediation: 

I did ask her at the meeting what - in three specific areas what she would do for remediation 
with James. These were the areas that I had identified that James needed continued remedial work in, 
word identification, word anal\sis, and spelling. Those were the things that I focused on particularly. 

She - when I asked her what she would use to teach word analysis skills, she told me that 
she did not have any panicular programs or methods in mind. She could name no methods or 
programs ... I was asking Ms. Folb what kinds of things do you use to teach word analysis skills 
when you see a student who has difficulties in this area, and she simply was unable to give me any 
information about what she would do in that area. (Tl-66) 

(Later) 

She did make a statement, my notes reflect, that she'd be happy to discuss with me any 



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specific recommendations. She was very gracious, and I think she meant that. (Tl-67) . . . 

In fact, after the meeting, on the way out of the building, Ms. Folb spoke to me very 
cordially, said she appreciated any information I could give her and I certainly had no hint at all that 
she experienced this as a negative situation. (Tl-69) 

76. Dr. Felton provided additional testimony about the May 30, 1996 meeting at Cape Hatteras School. She said 
she was advised that high school students were placed in content courses so they could learn the same material as regular 
education students and that the "resource" program, called "Teaching for Success" (TFS), was designed to support students, not 
remediate them. (Tl-70) She was told that children like James who had spelling problems were not taught how to spell but were 
provided with a "spell check" program. Dr. Felton was of the opinion that with the Teaching for Success program, the LD 
teacher's job was to help children with organization and assignments, and that the TFS program was not designed to remediate 
basic skills. (Tl-71) 

It [remediation] was simply not a priority, nor did it appear to me that she knew how to or 
had the skills to teach the basic reading and spelling and writing skills that I felt and others felt James 
needed. (Tl-72) 

77. Dr. Felton testified that Guidance Counselor Ward suggested that James might be able to get a Certificate of 
Attendance, instead of a diploma. 

I was frankly very stunned by this comment by Ms. Ward, who is the counselor. She was 
basically saying that one option is for James to leave high school with just a certificate of attendance 
rather than an actual high school diploma ... I found it astounding that someone who had sat in the 
meeting and listened to what Dr. Ellis had presented about James' ability would make such a 
recommendation. (T 1-72-73) 

78. Dr. Felton testified that at the May 31, 1996 meeting, the principal and school psychologist insisted that 
James' "good grades" was evidence that the school had met his needs. She disagreed with this, and asserted that a student's 
grades are only one piece of information and that James' grades were lower than would be expected, given his ability. (Tl-75- 
76) She testified that testing that measures the child's basic skills is also necessary: 

And those tests certainly indicate that there remain some serious deficiencies that will impact 
James's ability, even with help, to function independently in high school, and certainly, beyond 
which, for a student of his ability, is a reasonable expectation. (Tl-76) 

79. In her written report (Pa. Ex. 55) and her testimony at the Due Process Hearing, Dr. Felton expressed serious 
concerns about James' very poor spelling skills and the impact these inadequate skills will have on him later in life: 

James is a person who should go to college if he chooses to; intellectually, that's certainly 
within his realm of possibility. And the kids of spellings that he's producing are simply not 
acceptable for a person who is going to be functioning not only in college, but out in the working 
world. 

In my opinion as a clinician, it is not acceptable to simply tell a student like James 
to rely on spell check . . . [it] raises a possibility of whether James would be able to tell 
what the correct spelling was ... He still spells the word sure, which is a very high 
frequency word - he spells it S-H-0-R-E. He didn't know how to spell the word awful or 
the word nineteen. (Tl-79) 

80. Dr. Felton testified about the lEP developed by Dare County for School Year 1996-1997. (Pa. Ex. 53) She 
testified that lEPs must include a statement of "Present Levels of Educational Performance" that will provide teachers and 
parents with information about where the student is functioning, that this information "needs to be presented in a way that is 
easily understood and in a way that can be evaluated." (Tl-88) She testified that lEPs usually include information from current 
testing including test scores. (Tl-88) 

81. In her report (Pa. Ex. 55) and at the Due Process Hearing, Dr. Felton stated that Dare County's lEP (Ex. 53) 



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did not represent an adequate program for him. (Tl-94) 

Q: What was actually needed in an lEP for James for it to be appropriate . . . 

A: Direct instruction in readmg and writing skills, including spelling, as outlmed in my report. 

(Tl-94) 

Dr. Felton asserted that lEP goals should be measurable and should relate to the 
progress or skills the student will master during the academic year. 

.... [goals] would relate to what kind of progress he's expected to make in that particular 
area during the school year . . . could be e.xpressed in terms of grade equivalents; it could be 
expressed in terms of a standard score; could be expressed in terms of percentile; could be expressed 
in terms of the panicular content he would master. (Tl-94) 

82. Dr. Felton advised that in her professional opinion. Landmark School was an appropriate placement for James 
Brody. (T 1-101) She based her opinion on her professional contacts over many \ears and her own personal observations of 
James at Landmark in November, 1996. (Tl-102) She testified that the school emphasizes remediation of basic skills and has a 
very low teacher/student ratio. (Tl-104) 

... the emphasis at Landmark is on teaching students of average to above average ability, 
intellectual ability, like James, the actual reading, writing, math skills that one needs to be an 
independent student in an academically challenging environment. So their focus is strongly geared 
toward teaching students to be good spellers, to be good readers, to be good writers. (Tl-104-105) 

The\- purposefully and thoughtfully de-emphasize compensatory help . . . they still insist that 
students actually learn to write, even write by hand more than some education programs would 
consider important. (T 1-105) 

They certainly insist on correct punctuation, grammar, spelling. Writing skills are a big 
focus at Landmark, as are study skills . . . They've developed a manual that is a model for study 
skills instruction throughout the country'. (Tl-105) 

83. Dr. Felton testified about the two programs in terms of educational benefit and appropriateness: 

Q: In your opinion, the public school's proposed lEP, would James have 

received educational benefit from that? 

A: I certainly think he would have received some educational benefit. I do not think it 

would have been appropriate to meet his needs. 

Q: The program at Landmark, do you believe that he is receiving educational benefit 

from that? 

A: Yes, I do. 

Q: Taking it a standard higher, the program at Landmark, how close does that come to 

helping James reach his potential? 

A: In my opinion ... the program at Landmark is designed as - to be as effective as 

one possibly can in that regard. I think it is an appropriate combination of remedial help, utilizing an 
intensive one-on-one tutorial setting using materials and approaches that . . . certainly reflect current 
research in the field and, in addition, presenting him with content area material at his intellectual 
level. (Tl-107-108) 

84. Dr. Felton offered her opinion that James requires continued educational help: 



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... I do not think that James is finished . . . instruction in basic skills will need to continue 
in order for James to be able to function independently at his intellectual level. And I am, frankly, 
pleased in North Carolina that we have the expectation that students who are bright should be able to 
function at their intellectual level. (Tl-110-111) 

85. On cross-examination. Dr. Felton clarified her recommendations about direct instruction and the meaning and 
significance of the various skills, such as word attack skills, word analysis, decoding, spelling, and phonological 
awareness. (Tl-1 15) 

86. In response to questions by school board counsel. Dr. Felton explained that the passage comprehension subtest 
of the Woodcock Johnson is not an adequate measure of reading comprehension abilities. (Tl-126) Dr. Felton testified that the 
North Carolina testing completed on eighth grade students is suspect. 

... to my knowledge, and I have asked for this information from the Department of Public 
Instruction, but to my knowledge, no data exists concerning the relationship between what North 
Carolina calls eighth grade reading competency and any other standardized national ly-normed 
measures. (T1-I30) 

87. On cross examination. Dr. Felton testified that James' progress in Word Attack skills after attending the 
summer program at Landmark was "substantial progress" but "not that uncommon" in children who have been immersed in an 
intensive remediation program. (T 1-141) 

88. Counsel for Dare County asked Dr. Felton to elaborate on what skills needed to be remediated: 

Q: What - what basic skills besides that - besides the ones identified have you - do 

you say that he needs work on? I'm sorry; I'm not sure I understand what your testimony was. 

A: My testimony is that he needs to work on decoding skills . . . with the goal of being 

able to accurately read multi-syllable words at a level commensurate with James' intellectual level so 
that he can read text and material appropriate for him. That's one area. (Tl-168) 

89. Dr. Felton testified that teachers often abandon phonics programs with dyslexic children like James because 
they do not know to start with phonological awareness skills or how to do intensive sequential, decoding skills instruction. (Tl- 
170) She testified that North Carolina certification does not require LD teachers to know how to teach these children to read, 
spell and write. (Tl-174) 

Q: So you think teacher training is a critical element of properly remediating the skills 

deficits in learning disabled students? 

A: Definitely. Teacher training and appropriate, proper materials and proper setting in 

which to carry out instruction are all critical components. (Tl-175) 

90. On cross-examination, Dr. Felton testified that the initial training, in-service training sessions, and ongoing 
supervision that Landmark teachers receive seems adequate to enable them to teach effectively. (Tl-183-184) 

91. Dr. Felton clarified her views on regression and James' minimal progress while in Dare County special 
education — that in spite of special education, the gap between him and his peers widened over time. 

Q: It means that they're not progressing as fast as their peers; is that correct? 

A: It doesn't mean simply that. It means they're getting - in relationship to their peers, 

they're further behind now in an area than they were at a previous point in time. 

92. On cross-examination. Dr. Felton testified that there was no support for providing remediation to children 
with reading disabilities in an inclusion model. (Tl-21 1) 

93. On re-direct. Dr. Felton reiterated her position that based on her evaluation and review of his previous testing 



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and lEPs, Dare County Public Schools did not provide James Brody with an appropriate education. Based on his ongoing skill 
deficiencies, she concluded that "the level of instruction and focus of instruction had not been appropriate to meet his needs." 
(T 1-2 17) She testified that "talking books" may be used as an aid or tool, but "not as a substitute for teaching the child to 
become an independent reader." (T 1-2 17) 

... it is my opinion that it is not sufficient for us to produce students who can pass social 
studies tests if tests are read to them . . . We want him to leave high school being able to read and 
function at college, and society is demanding higher levels of people when they leave college ... so 
basic skill instruction has got to be part of what we provide students who get to high school without 
these skills. (Tl-218-219) 

94. Dr. Felton testified that when James entered Landmark School at age thirteen, his oral reading rate was below 
the first percentile, his reading accuracy was at the ninth percentile, and his oral reading was at the second percentile level. She 
testified that when he entered the intensive six-week summer program at Landmark, his skills were at the third, fourth to fifth 
grade levels in reading. After the Landmark summer program, James' reading skills improved by nearly a year. (Tl-223-224) 

95. The second witness to testify was Dr. Rick Ellis. Dr. Ellis is a clinical psychologist and certified school 
psychologist. He worked as a school psychologist for 15 years before entering private practice. He has evaluated between one 
thousand and fifteen hundred children for learning disabilities, emotional problems, mental retardation, and language problems. 
(T2-3) He consults with Chesapeake Schools and Old Dominion University. (T2-5) He has published articles on research on 
educational assessments, educational remediation, and educational programming. (T2-6) 

96. On direct examination. Dr. Ellis testified that the "Matthew Effect" is a term that describes an apparent loss of 
intellectual abilities when a child does not receive an appropriate education; 

... if a child is not presented with adequate educational opportunities or does not have 
requisite reading or math skills . . . there's a decline in those overall cognitive abilities, intellectual 
skills as time goes on. (T2-12) 

Q: Then if I'm understanding you correctly, the Matthew Effect, the IQ score can go 

down over time? 

A: Yes. IQ score or tests of cognitive abilities decline over time because they - the 

child is not provided with the skills and abilities to benefit from learning in different areas. (T2-13) 

97. Dr. Ellis testified about the emotional toll on learning disabled children if the education they receive is not 
appropriate. 

They often feel lost and frustrated, anxiety problems develop, depression-related difficulties 
develop, behavior problems. They become more difficult in the classroom; they turn off to the 
learning experience . . . Children often suffer from the emotional side effects of improper academic 
instruction, and it begins a downward spiral so they become less and less involved in the learning 
process, often resulting in dropping out of school, trouble with the law, because they aren't' getting 
their needs met in the educational environment. (T2-15) 

98. Dr. Ellis testified that on the Detroit Test of Learning Aptitude, James' score of 125 placed him at the 95'" 
percentile. The 95'" percentile placed James in the superior range on this test. (T2-23-24) 

99. Dr. Ellis conducted two comprehensive psychological evaluations on James. He assessed James' intellectual 
ability, academic achievement, visual motor functioning, attention deficit disorder, behavioral and emotional functioning. {T2- 
31) 

100. Dr. Ellis completed his first evaluation of James on April 20 and July 25, 1996. On the Stanford-Binet 
Intelligence Scale, James' Full Scale IQ was 122. In Verbal Reasoning, his composite score of 1 19 placed him in the upper end 
of the high average range. His abstract visual reasoning score of 123 placed him in the superior range. His Quantitative 
Reasoning or mathematical reasoning ability was at the 98'" percentile (standard score of 134) which placed him in the very 
superior range. (T2-34-35) 



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101. Dr. Ellis testified that James has been tested on one of two forms of the Wechsler Intelligence Test for 
Children on four separate occasions. (T2-40) With each administration of the Wechsler, James' Full Scale IQ score dropped. In 
1991, James' Full Scale IQ was measured at 127 (96'^ percentile) (Pa. Ex. 7) When Dr. Ellis evaluated him in 1996, his Full 
Scale IQ had dropped to 103. (T2-12) 

102. Dr. Ellis testified that he administered the Woodcock Johnson test to James and found "significant gaps in his 
learning or his abilities." (T2-48) 

In Broad Math, his standard score was 111, with a percentile of 76 . . . [in Broad Written 
Language] his standard score was 90, and his percentile rank was 25. [On the Dictation subtest] . . . 
Standard score was 80, percentile was nine. (T2-48-49) 

103. In April, 1996, Dr. Ellis evaluated James' emotional status and found many areas of concern, including signs 
of anxiety, depression, and social problems. Many of James' scores were above the 90'*' percentile. (T2-53-54) When asked to 
summarize James' in terms of emotional issues. Dr. Ellis testified that: 

That he had a lot of problems. He had moodiness. He had difficulties complying with 
requests at - by his parents. He was impulsive . . . negative self-statements, statements related to 
depression. (T2-57) 

104. Dr. Ellis testified that he attended an lEP meeting in Dare County with James' parents. He presented his test 
results and a draft of his report to the IE? team. He testified that he and Dr. Felton made recommendations: 

We recommended that James receive instruction and assistance in the areas in which he was 
deficient, particularly his reading and written language. (T2-58) 

105. Dr. Ellis testified that books on tape might be used appropriately with some children with disabilities: 

Well, predominantly, the blind children, and sometimes with children with severe, severe 
language or visual processing, or any handicap that would make the - it impossible or near 
impossible for them to benefit from the written text . . . For James, I feel that he is able to learn to 
read and books on tape would only give him a crutch . . . that there his more to be gained 
interpersonally, educationally from the actual reading experience, as opposed to a book on tape or an 
accommodation such as that. (T2-60) 

106. Dr. Ellis tested James a few days before the Due Process Hearing. He found that James' skills, especially in 
Written Language, were variable. In Dictation, his standard score was 75 and percentile rank was 5. On Writing Samples, his 
standard score was 134 and percentile rank was 99. (T2-62) 

107. Dr. Ellis was asked how James' skills have evolved since he entered Landmark School a few months earlier: 

I think it's provided him with academic growth at a greater degree than he was provided 
before that time. I think his nonacademic factors are better. He appears more positive about school. 
He states that he likes it there. He doesn't like the amount of work and the structure, but I think he 
acknowledges that it's what he needs. (T2-66) 

108. Dr. Ellis testified that Dare County's lEP that proposed continuing James in the "LD Resource" program was 
not appropriate. (T2-68-69) He explained why: 

I don't think continued placement in the resource setting would have been appropriate for 
James, due to the extent of his reading and written language difficulties. (T2-68) 



James. 



Q: Do you believe that Exhibit 53, Public School's Proposed lEP, is appropriate for 

A: No, I don't. (T2-69) 



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109. Dr. Ellis testified that the lEPs were not properly drafted in that they did not have goals and objectives written 
in measurable terms. (T2-71) 

110. On cross-examination. Dr. Ellis was asked about the "re-norming" of the Wechsler Intelligence Scale for 
Children. 

Q: Okay. Isn't it true that when the test was renormed for the revision that all the test 

score of all the children dropped? 

A: No. 

Q: Okay. So you're not sa>ing that there was an e.xpected drop in IQ score between the 

two tests? 

A: Some children's IQ's dropped and some didn't. (T2-76) 

111. Dr. Ellis explamed that the change was not predictable and that while some children's IQ scores went up, 
others dropped drastically. (T2-78) He testified that psychologists are debating the significance of these changes and that he 
usually does not use the Wechsler Intelligence Scale because he thinks it is a less reliable test for the children he sees in his 
practice. (T2-82) He also testified that the number of school psychologists who use the Wechsler is declining as better tests 
come out. (T2-83) 

112. On cross-examination. Dr. Ellis testified that James' strong gain in skills while enrolled in the summer 
program at Landmark was not unusual if the child is involved in private tutoring or intensive remediation. (T2-1 16) 

113. Dr. Ellis testified about the reasons why the Wechsler Intelligence Scale did not provide a valid estimate of 
James" intellectual ability. (T2-127) He also testified that James did not get a ceiling level on two of the Binet subtests, which 
suggests that his potential may be even higher than the Binet indicated. (T2-166) 

114. On cross-examination, school board counsel advised Dr. Ellis that Dr. Felton favored using books on tape: 

Q: are you aware that Dr. Felton testified yesterday she thought that [books on tape] 

would be a useful tool for James in the - for his regular classroom content courses? 

A: No, I wasn't aware of that. 

Q: Would you disagree? 

Objection: 

Q: If Dr. Felton — did indeed testify that she thought books on tape would -would be 

helpful for James, would you disagree with that? 

A: I think helpful would be a relative term. 1 think he really needs to de%elop those 

skills in reading. I think, \ou know, watching a video of something would be helpful to someone, but 
that's not going to gi\e him the skills and abilities that he needs to be successful for the rest of his - 
his high school, an if he goes on beyond that ... I don't see that as the answer for James. 

Q: So to the extent that other professionals have recommended that, you disagree that 

that would be - 

A: No, I said it would be helpful but - but I don't think in the long run it would be 

beneficial for his long-term career, or long-term educational program and career. (T2-144) 

1 15. On cross-examination. Dr. Ellis testified that at this time, James needs to attend a residential school. (T2-145) 
He clarified his statement: 



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The statements from school staff at that meeting were that they were not able to provide him 
any remedial services in that setting, that - I believe — hearing the words "we're not set up for that," 
that it was not part of the Hatteras School special education delivery model to include the necessary 
remediation services that would be appropriate for James. (T2-145) 

1 16. Appendix C and Regs state who has to be at the lEP meeting - child's teacher! 

117. School board counsel asked Dr. Ellis several questions about who attended the May 1996 lEP meeting: 

Q: But none of his teachers who had taught him in the past were available, or were at 

that meeting, on the day that you went, isn't that true? 

A: School board counsel asked Dr. Ellis about Dare County's proposed lEP: 

Q: Have you determined, what, if any, instructional remediational - remediation 

strategies are contained within the lEPs? 

A: I recall some organizational skills and support for his academic subjects. 

Q: That's all? 

A: Yes. 

118. Dr. Ellis testified on cross that he has worked with three individuals who attended Landmark and disagreed 
with school board counsel's attempt to characterize Landmark School as a "methodology." 

I think Landmark is an overall program, and peer culture even, if you would, where the 
emphasis is on creating positive educational outcomes. I've evaluated one child who subsequently 
went to Landmark. ... he [went] to great lengths to attend Landmark College, and he described that 
experience as the best experience of his life . . . there's a lot more there to help him make up the lost 
ground, his areas of deficit, and it would provide him that opportunity. (T2-155-156) 

1 19. On cross-examination. Dr. Ellis testified that he was involved in another Dare County special education case. 

Q: Have you ever been to the Dare County Schools beyond that one lEP meeting that you went 

to? 

A: Yes. A few years ago, I evaluated another Dare County child and conducted my 

evaluation and sat in on an lEP conference, took a tour of one of the schools, made a 
recommendation for an out-of-state placement for that child, and that recommendation was 
followed through with. (T2-157) 

120. On re-direct. Dr. Ellis testified that there was no discussion about changing the lEP after the lEP team heard 
input from Dr. Felton and him. (T2-159) He was asked his thoughts about "mainstreaming" James into high school. 

I think that at the time he had a very strong emotional component against going into 
the regular classes because of his continued difficulties, and that without feeling any progress 
or feeling like he was getting ahead of the game educationally . . . that was going to 
continue to be aversive to him ... he had shared about the other kids making fun of him . . 
. it was a very frustrating experience for him to be in a regular classroom . . . there was an 
anxiety component, a depressive component. He wanted to give up often. (T2-159-160) 

Q: Had James been mainstreamed, in your professional opinion, what would have 

happened to his emotional state? 

A: It would have continued to deteriorate. (T2-160) 

Q: Did you hear a proposal about not getting a high school degree and getting a 



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certificate instead? 
A: Yes. 

Objection. 

Q: In your professional opinion, for a youngster who had an IQ that tested at 127, do 

you believe it's appropriate to spend another year in high school in order to be taught how to 
read, or to waive the right to a high school diploma? 

A: No. Because in my experience, I've seen children with significant learning 

disabilities function at the top of their class, which is where James' expectations are. given 
his ability . . . (T2-161) 

121. On re-direct. Dr. Ellis testified that, during the summer program at Landmark, James made ten months of gain 
in reading skills, as measured by the Gray Oral Reading Test. (T2-178) He characterized this gain as "typical for a child 
receiving intensive remediation in a structured setting by well-trained staff It's common." (T2-178) 

122. On re-direct. Dr. Ellis was asked again about the renorming of the Wechsler. He agreed that between 1991 
and 1994, James' Full Scale IQ score dropped from 127 to 1 14. 

Q: Now, he was given the WISC III again, though. He was given it by you in July of 

'96, and he went from 1 14 to what? 

A: 103. 

Q: And how much renorming of the WISC III to the WISC III was done during that 

period of time? 

A: None 

Q: Was that the same test? 

A: Yes. 

123. On re-cross. Dr. Ellis was asked about discrepancy formulas. He testified that using an IQ score of 103 for 
James when he had previously scored 127 was unprofessional. 

124. Using a chart that had James with a Full Scale IQ of 103 and "an achievement score of minus four in reading," 
school board counsel attempted to "prove" that James no longer had a learning disability. 

You know - the assumption of your chart and your discrepancy is that his IQ - that he's 
gotten -he's become a dumber child since 1991. I don't think James has gotten dumber at all since 
1991 so using those numbers I think is totally inappropriate ... so saying that James has gotten 
dumber and just because the IQ test score has gotten down and he doesn't need a learning disabilities 
program is ludicrous. (T2-191) 

125. Dr. Ellis testified that psychologists should use "the best estimate" of the child's IQ and his ability. He 
testified that it is inappropriate to use a discrepancy model to deny services to children: 

. . . You could give that test to a blind child, and there wouldn't be any discrepancy at all or 
a child with a hearing disability and it would be inappropriate. You know, my belief is that you try to 
find the best estimate of potential; you use that as your IQ. You don't get the lowest scores you can 
get and then use that to compute the difference. (T2-193) 

126. The ne.xt witness to testify was Linda Brody, James' mother. Mrs. Brody testified about James' problems, 
beginning in Kindergarten with reversals and inability to learn his ABC's. She recalled that in Kindergarten, James "started to 



596 NORTH CAROLINA REGISTER October I, 1997 12:7 



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avoid doing things because he was afraid of failing." (T2-202) Because of these problems, his parents placed him in the Island 
Academy for the next two years. By the end of second grade, they decided to return him to the public school program. (T2-202) 

127. Mrs. Brody testified about her reaction to the psychological evaluation by Mr.. Bateman in 1991: 

I was very relieved. I knew that my son was very bright just by what he did at home and the 
building and stuff, and I was very relieved that he had a learning disability because it would make 
sense of why things weren't consistent or - or what was going on ... So, I was - I was happy. I - 
you know, you've got a problem and you identify it, in my view, an d you fix it . . . (T2-206) 

128. Mrs. Brody testified that by fourth grade, James' classmates were making fun of him because he was "pulled 
out" of class. 

He said some of his friends had told him he must be retarded since he was going to class 
with retards. And I told him, no, everybody needed help, but his friends insisted that it was a 
retarded class . . . kids being kids, you know, knew that there was a retarded child in the class and 
assumed that everybody was retarded . . . 

129. Mrs. Brody testified about James' fifth grade year: 

That was the worst year . . . things became more difficult. He began to feel real bad about 
himself, and he really felt something was wrong with himself ... he wasn't believing that everything 
was all right. And there were many nights that - a lot of times he couldn't even finish the work in 
school, let alone his homework ... he was ten years old, we'd be up like three or four hours and 
scribing and reading for him. 

And at that time ... I didn't do any of the work for him. I mean, I made him work, and he 
was just exhausted. I mean, he just dreaded it. He would go to his bedroom and cry, say he was 
dumb. He - he wanted to kill himself that year. It was one of the worst years I've ever gone through 
in my life. His teacher was horrible - his fifth grade teacher. She would make fun of him in front of 
other people, in front of the classmates. (T2-210-21 1) 

130. Mrs. Brody testified about her attempts to get books on tape for her son: 

The load was so hard at night with us reading for James and scribing for him. I thought that 
maybe if he could get books on tape that things would be just a little bit easier and he" be a little 
more independent of me or his father . . . that's what you do when you get older is you get 
independent . . . when we got to the sixth grade, there were no books on tape. (T2-21 1) 

131. Mrs. Brody also testified about her son's re-evaluation and learning that his scores were dropping. 

When I went into that meeting, I was going in really excited because two of the teachers told 
me that great progress had been made . . . and when they told me that his IQ dropped 25 points ... I 
just was shocked. I - everything — I mean, it was just like my stomach fell out. I just couldn't 
imagine what happened to my son, what is going on here. 

I felt desperate, scared, didn't know what to do. 1 thought we were fixing something . . . 
there's a problem, I can fix it, I was scared and shocked. And I asked Mr. Bateman why - why the - 
what the drop - why there was a drop . . . and I didn't get any real explanations as I'm getting today 
at that time. 

I noticed that there was a difference in the WISC-R and the WISC-III, and I said are they 
different tests. And he said no, they're just re - renormed or - but he said something else - you 
know, redone test. (T2-212-213) 

132. Mrs. Brody testified that after this, she had another evaluation done on her son from the Lab School in 
Washington DC. She shared the results of this evaluation with her son's LD teacher. {T2-213) 



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133. Mrs. Brody testified that in fifth grade, James became suicidal: 

Q: ... Had he ever - had your son ever admitted to you thoughts of killing himself? You can't— 

A: To me, he wanted to die. 

Q: You need to answer the question. Did your son discuss with you any thoughts of 

killing himself? 

A; Yes ... He would come home and he would go in a room and he was so very agitated, 
and he would just want to throw things around, and just wanted to be dead. He just wanted 
to be dead, what was the use of it all. And it scared the heck out of me. And I - at that time, 
I cried, I held him, I told him it would be all right, it would get better, we'd work together, 
I'd fix it . . . (T2-214-215) 

134. Mrs. Brody testified that she provided this Lab School evaluation to Dare County. Dr. van Hover 
recommended that they get a Speech Language evaluation on James. The parents followed through with that. (T2-215) 

135. As she continued to read about dyslexia, Mrs. Brody learned that dyslexic children needed to be taught 
differently. (T2-216i In her reading, she learned about Landmark School and decided she had to find a way to send James. She 
testified about the changes in her son after his summer at Landmark: 

He was no longer hunched over. He was talking. He was laughing. The best thing was he 
called me two weeks after being there an said, hey, listen to this Mom and he said, Sunday, Monday, 
Tuesday, Wednesday, Thursday, Friday. The child could never say this ever ... to hear him be so 
thrilled that he could say this and that he could leam ... it was so wonderful. I - it was the best 
thing. It wasn't the scores; it was his self confidence and his just pure happiness. (T2-218) 

136. Mrs. Brody testified about signing lEPs and her parental role: 

Q: What was your understanding about the significance of signing the lEP? 

A: It just meant that you were present. 

Q: That was your understanding, it was you - present and accounted for? 

A: Uh-huh. And they tell you that very - they'd say, well, just go ahead and sign this; 

it doesn't mean you agree, just that you were present. They - even,' lEP r\e been to they've 
said that. 

Q: I see . . . did they ever gi\'e \ou the rules, the North Carolina regulations. 

A: In 1991. 

Q: You remember getting a copy of the regulations? 

Q: When was the last time you got a copy from the county? 

A: In our IE? meeting with Terry Jones in June. I can't think of the date. June. 

Q: And . . . what was the date on the inside of the book? 

A: 1993. 

Q: Is there any doubt in your mind it was the '93 and not the - 94 book. 

A: It was a 93 because I've never seen a 94. 



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137. Mrs. Brody testified about the May 30, 1996 lEP meeting: 

When I got there, I was not prepared that they were going to drop one - he had two pullouts 
all this time, and they dropped one for high school. I think the high school policy is not to put them - 
only one pull out class a day. TFS is all they give for LD. I think that's right. But I was shocked at 
the reduction. And I was scared because we were going to high school now . . . 

138. Mrs. Brody testified about the changes in her son since he entered Landmark in September, 1996: 

James — James is entirely the real James now ... he is a kid. He's easy to get along with. 
He likes interacting with people. He's not afraid to talk to people in case he says something wrong. 
He's sure of himself. He has interests. He has friends. He's learning. The first couple of months . . . 
he was pretty miserable, you know, truthfully. He missed home. 

He was mad. He was mad that he could learn, and why couldn't he learn like that and stay 
home. He and he I mean he was happy that he could nod it - why can I learn here and I couldn't 
there. And - and we talked that out. They didn't have it here but we've dealt with that now. 

Q: You asked for Due Process Hearing in August and your son was not in Landmark. 

What happened? 

A: Financially, we couldn't do it. No. Zander got some information . ..but he also 

called his grandmother and his mother, and I called my sister and they all gave us - made 
loans. And they're not gifts, they're loans. Since then Zander and I have remortgaged the 
house. I've cashed in my retirement. I've cashed in Zander's life insurance. I've maxed out 
the credit cards. And I've taken loans out from my credit union. So we" re we've gone all 
the way to get him there this year, to keep paying. 

139. On May 1, 1997, James Brody was the next witness to testify. 

140. He testified that attending Landmark has changed his attitude about school because he is being educated with 
>ther children who have similar problems - children like him. After a week at Landmark, James realized that he really was not 
tupid. 

141. He described the summer program at Landmark, including his schedule and the things he studied in his one- 
jn-one tutorial and language arts classes. He said that after he completed the Landmark summer program, he felt more sure of 
limself in language arts and pre-algebra. After Landmark, he finally understood that he was dyslexic but he could cope with it. 
rJe told his parents that he wanted to go back to Landmark. 

142. When he returned to Dare County Public Schools for the eighth grade, nothing changed. He began to dread 
'oing to school. He testified about taking the North Carolina standardized testing and said that he did have modifications. He 
aid that he took the competency test in Ms. Hinton's class. She helped him with the questions on the competency test and how 
understand them. 

143. James testified about his experience at Landmark during the past school year. He said, "Landmark was hard" 
because he did not have anyone to scribe for him as he had in the public school. He was required to do his own writing! 

144. The staff at Landmark worked with him on reading and writing skills. In Language Arts, he is working on 
vriting multi-paragraphs and compound sentences. In his tutorial, he is working on rules of sounds with vowels. He testified 
hat he never had work on sounds before. 

145. James testified that he spends about one and a half-hours a night on homework. No one helps him with his 
lomework. 

146. James also testified about his adjustment to Landmark. He said that the first month was tough because he was 



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homesick. When asked about mainstreaming issues, he did not agree that he needs to be back at public school with regular 
students. He said that Landmark is "tougher" and he has a lot more work but he still wants to return next year. 

147. When asked about his future, James testified that he has a lot more possibilities. "I could be more than I was . 
. I can write more." He said that he is more optimistic now and socializes better. He no longer feels like he an "outcast." 

148. Dr. Wendy Levin was the next witness to testify. 

149. She was the first witness to testify for Dare County Public Schools. She was not excluded as a witness. 

150. She is associate director of a diagnostic teaching clinic that receives many referrals from school systems 
around the state. She does assessments and develops programs. She estimated that she does from 200 to 300 evaluations per 
year. 

151. Before the hearing. Dr. Levin never met or talked with James, never tested him, and never attended any lEP 
meetings about him. Although she trained as a teacher, diagnostician, and school psychologist, she is not and never has been a 
teacher or a school psychologist. She has no background in research. She testified that she received her doctorate in May 1996. 
She became cenified as a school psychologist in October, 1996. 

152. Dr. Levin testified that she recommends programs that can be implemented in public schools. When she 
develops a program, she tries to balance the needs of the school and the needs of the child. She discussed a Challenge and 
Champions program for children who lack basic and applied skills. She testified that she uses a "mainstream/ inclusion model" 
that is not specifically geared for children who have learning disabilities. This model allows for maximum opportunities for 
integration. The Challenge program is a three-week program for children who have learning disabilities, ADHD, and/or gifted, 
but excludes emotionally disturbed children. 

153. She was not asserting that James needed the "Challenge" program. 

154. Dare County Public Schools does not have the "Challenge" program. 

155. She testified that North Carolina uses the discrepancy model that appears to be simple and objective. She 
admitted that dyslexia is a neurological condition that does not go away. She testified that it is very common for children with 
learning disabilities like dyslexia to show a decline in scores over time. 

156. Although she agreed that the IQ scores of children with learning disabilities often "decline over time," she does 
not "agree" with the Matthew Effect. She testified that she does not believe that the decline in a child's IQ scores correlates with 
a lack of appropriate instruction. She admitted that she has not done any research in this area. 

157. She testified that the Stanford-Binet measures different abilities than the Wechsler. She testified that the 
Wechsler is well standardized and gives consistent scores over time. She thought that James' low scores on some of the 
Wechsler subtests were due to his disability which is "processing speed." She thought that the decline in James' IQ between 
1991 and 1994 was because the test was renormed. 

158. She was unable to explain the drop in scores before the test was renormed. 

159. She was unable to explain the continuing drop in James' IQ scores between 1994 and 1996. Despite these 
unanswered questions, she believes that the July 1996 scores on the Wechsler are a valid measure of James' ability. She stated 
that some things in tests cannot be explained. 

160. Dr. Levin testified that when she reviewed the test results by Dr. Ellis, James' reading was "stable." Despite 
elementary level scores, she asserted that he is progressing at the same rate as his peers. 

161. He did not progress to his potential, the North Carolina standard. 

162. She testified that James' scores in Writing Samples increased significantly between 1996 and 1997. She 
thought that these improved scores meant that his writing skills may have improved. 



600 NORTH CAROLINA REGISTER October 1, 1997 12:7 



CONTESTED CASE DECISIONS 



[ 



163. Dr. Levin reviewed the lEPs on James for the past five years. There were no objective measures in the lEPs. 
The Third Grade lEP (Pa. Ex. 9) did not have dates when James obtained the objectives. She testified that the lEP developed for 
the fourth grade (Pa. Ex. 17) lacked information about whether mastery was obtained. The fourth grade lEP was the standard 
course of study. 

164. Dr. Levin testified that parents are entitled to have an annual review of the lEP goals and objectives. 

165. When she reviewed the fifth grade lEP (Pa. Ex. 21), this lEP did not include evaluation schedules, and no 
mastery of objectives was obtained. The lEP described the standard course of study and did not include information about 
whether or when lEP objectives were reached. 

166. Dr. Levin testified on direct exam that the seventh grade lEP goals were appropriate for James. She felt it was 
appropriate to add an lEP goal about map reading, even if James did not have a "deficit" in maps. She said that maps are part of 
the standard course of study in seventh grade. (Pa. Ex. 27) According to Dr. Levin, "direct instruction" does not mean one-to- 
one instruction. 

167. Dr. Levin testified that in high school, children receive compensatory lEPs because ninth grade is a different 
environment. The lEP developed for James did not address all areas of deficiency. When asked why the school could not 
remediate James' basic skills. Levin testified that they had tried many times to remediate James but he had not made progress. 
She felt that James could not grasp the "firm acquisition of phonics and spelling skills." 

168. She testified that James should not be considered for a residential placement because, in her belief, formally 
diagnosed emotional problems are the only justification for a residential placement. She did not testify to any familiarity with 
case law regarding entitlement to a residential placement such as Trident Academy, Oakland School, or Landmark School. 

169. On May 5, 1997, Cindy Caruso was the next witness to testify for Dare County. Ms. Caruso's education 
focused on teaching visually impaired and blind children. 

170. She began working with James in the Spring of 1991, when he was in third grade. She did some of the earlier 
testing of James. She described her approach as "remedial and phonics-based." She believed that James made steady progress 
during the 1991-1992 school year. She used the Brigance to measure progress. 

171. Ms. Caruso testified about how she developed lEPs. Typically, she brought a draft lEP to the meeting. She 
testified that she could not write an lEP at the lEP meeting because it would take too long. She testified that her practice was to 
bring in the lEP and share it with the parents. 

172. In early 1992, two different lEPs were written for James. The first lEP was written on March 6, 1992 (Pa. 
Ex. 12), the second lEP was written on June 4, 1992 (Pa. Ex. 17). Despite the fact that they were written just three months 
apart, the goals and objectives were quite different. Ms. Caruso testified that the differences were due to the "standard course of 
study," i.e. what happens in the regular classroom. 

173. Ms. Caruso testified that she taught reading and spelling together. It became obvious to her that James needed 
to work on "written language" skills. She was concerned about his reading speed. She believed that James made progress. She 
did not complete the information about when he obtained mastery. There was no standardized testing completed on James in the 
Spring of 1993 to measure progress or lack of progress. 

174. Ms. Caruso has not worked with James since fifth grade. She did not attend the May 1996 lEP meeting but 
was asked to attend the June, 1996 lEP meeting. She believes that the June 1996 lEP is appropriate, even though the services 
were reduced. She asserted that the lEP was appropriate because James is smart but needs help in mainstream classes. 

175. On cross-examination, she acknowledged that the Brigance does not have any data normed to other children. 
Because you cannot compare children, this can lead to problems. She was asked about concerns of educators that the Brigance 
lends itself to teaching to the test and acknowledged that it could. James' lEP goals were based upon the Brigance. 

176. Stephanie Hinton Gray was the next witness for Dare County. Ms. Gray was James' LD teacher in middle 
school. James' class included children who were mentally retarded, learning disabled, other health impaired, and behavior 
disordered. She testified that despite her heavy load of challenging children, she spent 80-90 percent of her time with James. 



12:7 NORTH CAROLINA REGISTER October 1, 1997 601 



CONTESTED CASE DECISIONS 



111 . By the time James arrived in seventh grade, Ms. Gray testified that she was not allowed to deviate from the 
standard course of study for LD students. lEP Goals were the same for all seventh grade students. She felt that James made 
progress in the seventh grade. She used the Standard Course of Study to develop his lEP. 

178. She testified that eighth grade students were to learn the Standard Course of Study. In her opinion, acquisition 
of basic skills, such as reading and using remediation is not appropriate in high school because of the high school curriculum. 
Ms. Gray testified that she did not attend the May 1996 lEP meeting but did attend the June 1996 lEP meeting. She discussed 
James' situation with Karen Folb, the high school teacher who would be working with James. 

179. On cross-examination, Ms. Gray acknowledged that James had ongoing problems in spelling, punctuation, and 
organization. There were no present levels of performance in the lEP for spelling or penmanship. She admitted that James' 
grades were "modified." They did not reflect his true grades. 

180. His assignments were also "modified." Despite being at the 3"^ to 4'" percentile in Spelling and Writing, she 
asserted that he had mastered basic skills of phonemic awareness and decoding. 



school. 



181. Ms. Gray testified that the "Teaching for Success" (TFS) program is a "set aside" - pan of the program in high 

182. The next witness was Karen Folb, a special education teacher at Cape Hatteras High School. 



183. She initially asserted on direct exam that Dr. Felton started "whamming" her about how she would address 
James' needs. 

184. Ms. Folb testified that Ms. Gray advised her that James was ready to go on to high school. She testified that at 
the May, 1996 lEP meeting, she laid out a copy of the child's schedule of basic required freshman classes. She testified that 
they could add a second period of TFS but this would cause conflicts with graduation. 

185. Ms. Folb felt James was ready to go into mainstream high school classes. She did not think James needed a 
program like Landmark or that it was necessar>' for James. She acknowledged that Dr. Felton and Dr. Ellis said James needed 
more remediation. An lEP was not drafted that day. 

186. Ms. Folb testified that by the time most students get to high school, they have mastered basic skills. In her 
opinion, because James passed the reading competency test, he was ready for the high school mainstream. 

187. Ms. Folb reviewed Dr. Feiton's letter that stated James needed remediation. She took issue with the word 
"remediation." She opined that research shows that children lose motivation to work on phonics by the seventh grade, that they 
are "maxed out" in phonics instruction. She did not offer any "research" to support her opinion. 

188. She felt that basic skills needs are different and that older children need to be able to take notes, develop study 
habits instead of learning how to read. 

189. Ms. Folb was aware that James was having stress-related problems. She took the letter from Dr. Felton 
personally. 

190. On cross-examination, she went through her schedule of classes. She leaches three TFS classes and co-teaches 
two inclusion classes. There are 40 children in the ninth grade. TFS is a class that focuses on helping children make it in high 
school. It is available to other children - not just special education students. There is a regular TFS credit course and an 
Exceptional Children's TFS course. 

191. Ms. Folb testified on cross-examination about the May 30, 1996 lEP meeting. She reviewed evaluations on 
James. She remembered the van Ho\'er evaluation but was not sure about the Scottish Rite or Landmark test results. She agreed 
that present levels of performance are to "close the gap" between the child's ability and achievement. She testified that special 
education should be "to the total education of the child." 

192. Ms. Folb also testified about the June 1 1, 1996 lEP meeting. She recalls that Ms. Ward said that James could 
get a cenificate or he could graduate a year late. She testified that Mrs. Brody thought his reading was below average but the 



602 NORTH CAROLINA REGISTER October I, 1997 12:7 



CONTESTED CASE DECISIONS 



school thought he was doing all right. She testified and believes that "nobody can fix a disability." Remediation programs do 
entail more than regular classrooms. Her goal was to teach him ways to accommodate and compensate, not teach the acquisition 
of basic skills. 

193. Ms. Folb admitted that the decision had been made to place James in the TFS program before the May 30, 
1996 lEP meeting. She agreed that Ms. Hinton Gray moved on to compensation in middle school, rather than continuing to 
remediate. She admitted that even if James had failed the competency testing, they would not have changed the lEP 
recommendations. 

194. Ms. Folb admitted that she had no specialized training in area of decoding. Last time she had a reading course 
was in the Spring of 1977. 

195. Betsy Gwinn testified for Dare County. She taught Math at the middle school. She taught James for seventh 
and eighth grades Math and Pre-algebra. He made average grades in her class. 

196. On May 7, 1997, Dr. Betty Levey was the next witness to testify for Dare County. She was not excluded as a 
witness and was present during the previous testimony. 

197. Dr. Levey has a doctorate in Speech/Language and Mental Retardation. She was trained as a state review 
officer until 1995. She was hired by Dare County to act as a trial consultant. She never taught or met James Brody. She never 
tested him. She never participated in an lEP meeting about him. She reviewed the records in James' case. She testified that 
standardized test scores indicated that James made acceptable educational progress. 

198. Dr. Levey advocates using the "Deshler method" for adolescents with learning disabilities. She believes it is 
inappropriate to use basic skills remediation with middle school and high school students. She believes that by middle school, 
you are looking for independent learning. She testified that books on tape "help give independence." She does not believe that 
the Landmark teachers are qualified to teach LD students. 

199. On cross-examination. Dr. Levey disagreed with teaching decoding skills to LD students. She favored 
'adjustment of the curriculum, not adjustment of the student." She agreed that it is inappropriate and illegal to make placement 
decisions before developing the lEP goals and objectives. 

200. Terry Jones was the last witness for Dare County Public Schools. Mr. Jones is the Exceptional Children's 
Director. His staff advised him that the parents were requesting intensive remediation for their son and a residential placement if 
(ames could not be remediated locally. He testified that after reviewing the file, he could not support an out of district 
placement. 

201. Mr. Jones testified about the June 11, 1996 lEP meeting. He advised the parents that goals and objectives 
letermine the level of service a child needs. He testified that the parents and school came to an agreement on the goals and 
objectives. He agreed that the disagreement revolved around the level or intensity of services James needed. 

202. School board counsel asked Mr. Jones to look at the 1996-1997 lEP. He testified that there is no requirement 
o include test results or objective information and that the present levels of performance are whatever is agreed upon by the 
;ommittee. 

203. Mr. Jones felt that James was mastering the standard course of study. He made this decision based on James' 
jrades, his passing the competency test, and his progress on individual testing. Mr. Jones admitted that in this individual 
esting, there had been declines. 

204. Mr. Jones testified that after receiving the parents' August 6 letter, he called the school board attorney. After 
liscussing the situation with the attorney, he wrote a letter to the parents offering an lEP meeting or mediation. Mr. Jones 
estified that James has a less challenging curriculum at Landmark than he would have had in Dare County. He objects to 
-andmark because it is not the least restrictive environment and it costs more than $30,000.00 dollars a year. 

205. Mr. Jones testified that books on tape are available through his office. 

206. On cross-examination, Mr. Jones admitted that everyone on the lEP committee is responsible for providing 



2:7 NORTH CAROLINA REGISTER October I, 1997 603 



CONTESTED CASE DECISIONS 



input into the lEP. He admitted that the only person who has tested James twice was Mitchell Batemen. Mitchell Bateman did 
not testify at the Due Process Hearing. Mr. Jones testified that there was no requirement for school staff to document 
consideration of private evaluations. 

207. On cross-examination, Mr. Jones testified that before 1994, Parent's Rights Handbooks did not have a 60-day 
notice. 

208. After Dare County rested, Linda Brody testified about the Handbook and Notice issues. She testified that she 
has never received a 1994 Handbook. At the Due Process Hearing, Mrs. Brody testified that she did not receive a Parent's 
Rights Handbook dated 1993 until after the lEP meeting on May 31, 1996, not a reasonable time before the meeting. (T2-221). 

209. At the Due Process Hearing, Mrs. Brody testified that she had only received one other Parents Rights 
Handbook, which was dated 1991, before Dare County evaluated James for the first time. (T2-220). 

210. The school system introduced a copy of Parent's Rights Handbook dated 1994 which Mrs. Brody testified she 
did not receive. (T2-221) Her testimony was uncontradicted. 

211. James was the last witness. He testified that he wanted to return to Landmark School. 

CONCLUSIONS OF LAW 

1. The Individuals with Disabilities Education Act (IDEA), 20 U.S.C. Section 1400 et seq., is the federal statute 
governing the education of students with disabilities. The federal regulations promulgated under the IDEA are codified at 34 
C.F.R. Pans 300 and 301 . A child is deprived of a free appropriate education (FAPE) under two conditions: first, if the school 
system violates the IDEA'S procedural requirements in a way that detrimentally affects the child's education; and second, if the 
school system develops an lEP that is not reasonably calculated to enable the child to receive educational benefit. 

2. The controlling state law for students with disabilities is North Carolina General Statute Chapter 1 15C Article 
9 and the corresponding state regulations including the State Procedures Go\eming Programs and Services for Students with 
Special Needs, Sections, .1501-. 1541 (1996). 

3. The Office of Administrative Hearings has jurisdiction of this contested case pursuant to Chapters 150B and 
1 15C of the North Carolina General Statutes and the Individuals with Disabilities Education Act and implementing regulations. 

4. The Respondent is required under federal and state law to make available special education and related services 
to James Brody and offer him a free and appropriate public education as that term is defined under the IDEA and state law. 

5. James Brody is a student with a disability for purposes of the IDEA and corresponding state law. 

6. The public policy of the State of North Carolina regarding special education is: 

The General Assembly of the State of North Carolina hereby declares that the policy of this 
State is to ensure every child a fair and full opportunity to reach his full potential and that no child as 
defined in this section and in G.S. 115C-122 shall be excluded from service or education for any 
reason whatsoever. 

The policy of this State is to provide a free appropriate public supported education to every 
child with special needs, (emphasis added) G.S. 1 15C-106 

7. North Carolina statutory and case law require that special education must ensure that "the child has an 
opponunity to reach [his] full potential." Burke County Bd. ofEduc. v. Denton. 895 F.2d 973, 983 (4ih Cir. 1990) 

8. The Individuals with Disabilities Education Act (IDEA) creates only a federal minimum and States may 
structure educational programs, which exceed the federal floor. IDEA, 20 U.S.C. A. Sees. 1400-1485. 

9. North Carolina chose to exceed the federal benchmark and measure each child "against his or her own 
expected performance," In re Felton Letter, 23 IDELR 714, 717. (OSEP 1995) 



604 NORTH CAROLINA REGISTER October 1, 1997 12:7 






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I 



10. Under the Individuals with Disabilities Act, a handicapped child is deprived of FAPE if either (1) the school 
system violates the IDEA'S procedural requirements and thereby detrimentally impacts the child's education; or (2) drafts an 
lEP that is not reasonably calculated to enable the child to receive educational benefits. Board of Education v. Rowley, 458 
U.S. 176, 207, 102 S.Ct. 3034, 3051, 73 L.Ed. 2d 690 (1982); Hudson v. Wilson, 828 F.2d 1059, 1063 (4th Cir. 1987) 

1 1 . James is a student with superior intelligence and dyslexia. Dare County Public Schools failed to develop an 
appropriate 1996-97 lEP individualized for James Brody's "special needs." 

12. According to the public policy of this State in relationship to Special Education as stated in N.C.G.S. Section 
115C-106(b), one of the policies is to provide a system for identifying and evaluating the educational needs of all children with 
;pecial needs. It is to assure that the rights of children with special needs and their parents or guardians are protected, as well as 
o insure that there be no inadequacies, inequities, and discrimination with respect to children with special needs. G.S. 115C- 

^06. 

13. James' needs resulting from his dyslexia were not identified or properly evaluated by school personnel. 

14. James developed a negative self-concept with frustration that affected school and family relationships. The 
"rustrations and pressures to succeed in school created secondary behavioral problems. He began missing school. 

15. The mere facts that James received passing marks and was promoted from grade to grade is not dispositive in 
ietermining whether he received FAPE according to the United States Supreme Court. Board of Education v. Rowley, 458 U.S. 
176, 203 at n. 25, 102 S.Ct. 3034, 3049 n. 25 (1982)("We do not hold today that every handicapped child who is advancing 
rom grade to grade in a regular public school is automatically receiving a 'free appropriate public education."). 

16. The Respondent failed its affirmative duty to provide Petitioners with prior written notice of their rights to 
ndependent educational evaluations and a free and appropriate public education (FAPE). 

17. In compliance with the Individuals with Disabilities Education Act procedural requirements found in Chapter 
J i3 of 20 U.S.C. Section 1415, the NCDPI established due process procedures for parents and children. See North Carolina 
I department of Public Instruction 's Procedures Governing Programs and Services for Children with Special Needs, Section 1517 

Due Process Procedures for Parent and Children (1993 and 1996 edition which contain identical requirements) Section 1517 
D) states that "written notice which meets the requirements of paragraph (E) of this rule must be given to the parents of a child 
vith special needs before the local educational agency: 

(a) proposes to initiate or change the identification, evaluation, or educational 

placement of the child or the provision of a free appropriate public education to 
the child; or 

refuses to initiate or change the identification, evaluation, or educational placement of the 
child or the provision of a free appropriate public education." (Emphasis added) 

18. From 1987 to June 1996, numerous requests were made by the Brodys regarding the Respondent's provision 
)f a free appropriate public education which were never addressed by the Respondent. According the NCDPI rules, the Brodys 
k'ere entitled to notice of their rights for each of these numerous requests. The Respondent denied the Brody's an opportunity 
be heard regarding their concerns about James' educational programming. 

19. The Brody's never received specific explanations as to why the Respondent failed to consider their 
ndependent evaluations from their independent evaluators or why the Respondent failed to reimburse the Brody for these 
xpenses, why Brody's academic progress worsened from year to year, and countless other inquires regarding the Respondent's 
ailure to provide a FAPE to their child. NCDPI Rule 1517 (E) (1) (a-g). 



20. The Respondent's failure to comply with the procedural requirements of the IDEA and corresponding state law 
esulted in a deprivation of services and harmed both James Brody and his parents. Had Dare County Public Schools informed 
tie Brody's of their due process rights years ago, the parents could have asserted their rights at an earlier point in time. James 
/ould have received the services he needed to achieve academically in public school rather than having to resort to leaving 
ome and attending Landmark School. 



2:7 NORTH CAROLINA REGISTER October 1, 1997 605 



CONTESTED CASE DECISIONS 



21. Petitioners are entitled to compensatory education because of Respondent's failure to provide James with a 
FAPE. 

22. The North Carolina Administrative Procedure Act (NCAPA) requires that a petition for due process be filed 
within sixty (60) days of the contested action. N.C.G.S. Section 150B-23(b) NCAPA also states that the agency "shall inform 
the persons of the right, the procedure, and the time limit to file a contested case petition." Id. 

23. Until the Petitioner receives appropriate notice of her due process right, the statute of limitations is tolled 
Petitioner was not given prior written notice of her right to file due process within 60 days of any of the lEPs. It is uncontested 
testimony that the parents were never provided with notice of their rights. A parental rights book was proffered as an Exhibit by 
the School Board, however the evidence was that this version of the Handbook was not provided to the parents. 

24. Before June 4, 1996, the parents were not provided a Parent's Handbook advising them of their due process 
rights. 

25. Dare County Public Schools is charged with the affirmative duty of providing the parents with written prior 
notice of their due process rights. IDEA, 20 U.S.C. Ch. 33 Sect. 1415 (b) Despite extensive communication between the 
parties, no one from Dare County Schools gave the parents a Parent's Rights Handbook until Spring 1996 and that handbook 
was outdated. 

26. The Respondent failed its affirmative duty to apprise Petitioners of their rights to independent educational 
evaluations and a free and appropriate public education (FAPE). 

27. Petitioners have the right to an independent educational evaluation at public expense, if the parent disagrees 
with the Respondent's evaluation or the Respondent fails to conduct an evaluation. 34 C.F.R. 300.503(b). 

28. Petitioners had James evaluated by Drs. Felton and Ellis at their own expense. Moreover, the results of 
Petitioners' privately obtained independent educational evaluations must be considered by the public agency in any decision 
made with respect to the provision of a free appropriate public education to the child. 34 C.F.R. 300.503(c)(1). 

29. The Petitioners are entitled to reimbursement for either Dr. Felton or Dr. Ellis' educational evaluation. 

30. The Dare County Public Schools' 1996-97 lEP was fatally flawed. 

31. The Respondent's 1996-97 lEP failed to contain meaningful educational goals and objectives. Moreover, the 
criteria for measuring James' progress was inappropriate and violated Appendix C to Part 300 of the Code of Federal 

Regulations; see e.g.: Raelee S. r. Susquenita School District. F. Supp. , (M.D. PA 1996) affm'ed at Susquenita Sch. 

Dist. V. Raelee S. by Heidi 5., 96 F.3d 78, 24 IDELR 839, (3rd Cir. 1996)(Judge McClure found that the School District's lEP 
"failed to include meaningful educational goals, to establish meaningful and quantifiable short-term objectives or criteria foi 
measuring Raelee's progress, and failed to include examples of specific instruction methods useful for teaching Raelee." He 
stated that: "One of the goals imposed by federal regulations is an emphasis on closing the gap between the exceptional student's 
achievement and his or her ability levels. 34 C.F.R. 346, Appendix C"). 

32. Closing the gap between James' ability and achievement level was a realistic and meaningful goal for him anc 
an appropriate school objective under Appendix C of 34 C.F.R. 300. The 1996-97 lEP was not designed to close the gap 
between James' ability and achievement. 

33. Subsequent testimony from witnesses on behalf of James Brody and even School Board witness Wendy Levir 
proved that the lEPs violated Appendix C. 

34. Although in testimony. Dare County Public Schools implied that James would be better off in a larger public 
school rather than Landmark, for the 1996-97 school year Landmark was the least restrictive environment. The Fourth Circui' 
recognized, as does this court, that the mainstreaming preference of IDEA is secondary to educational benefit, i.e., leamin 
how to read and write. The Respondent failed to comply with the requirements of the IDEA, and unilateral private schoo 
placement was the only option available to the Petitioners. Carter v. Florence County School District Four, 950 F. 2d 156, 1 
IDELR 350, 352, (4th Cir. 1991). 



( 



606 NORTH CAROLINA REGISTER October I, 1997 12: 



CONTESTED CASE DECISIONS 



35. Respondent's 1996-97 lEP did not propose any specific measurable gain. The U. S. Supreme Court clarified 
the meaning of educational benefit in the Town of Burlington v. Department of Education for the Commonwealth of 
Massachusetts, 471 U. S. 359, 105 S. Ct, 1996, 2002 (1985). The Court focused on tuition reimbursement for parents when 
the public school defaults. Burlington was a unanimous decision issued thirty-four days after argument. (Chief) Justice 
Rehnquist defined the lEP concept and process. He stated that the free appropriate education mandated by the Act is designed 
for the specific needs of the handicapped child through the Individualized Educational Program (lEP) which is "a comprehensive 
statement of the educational needs of a handicapped child and the specially designed instruction and related services to be 
employed to meet those needs." The instruction must be specially designed to meet the child's unique needs so that the child 
will learn. Failing that, if the child learns in another environment, the parents are entitled to be reimbursed for securing and 
paying for that other school environment that was able to teach the child to read and write. 

36. James Brody is entitled to leam how to read, write, and spell. He is entitled to be exposed to and have access 
to instruction that will teach him those skills. 

37. The Individuals with Disabilities Education Act, as interpreted by Burlington, imposes only two prerequisites 
to reimbursement: that the program proposed by the state failed to provide the child with a free appropriate public education, 
and that the private school in which the child is enrolled succeeded in providing an appropriate education, i.e., an education that 
is reasonably calculated to enable the child to receive educational benefits. 

38. Dare County Public Schools has failed to teach James Brody basic reading, writing, and spelling skills and its 
recommendation that James should merely receive an attendance certificate completely contradicts the philosophy of the IDEA 
and the North Carolina "Creech Act." 

39. Landmark School taught James Brody basic reading, writing, spelling and arithmetic skills, and he received an 
appropriate education at Landmark School. 

40. Dare County Public Schools failed to develop an lEP according to the requirements of the Act, said failure 
results in the denial of a free and appropriate public education. Hall v. Vance County Bd. of Education, llA F.2d 629, 635 (4th 
Cir. 1985). 

41. Dare County Public Schools violated both the procedural and substantive requirements of the IDEA and 
corresponding state law resulting in harm to both James Brody and his parents. 

42. Petitioners are entitled to reimbursement of the private school tuition for the 1996-97 school year. 

ORDER 

1. The Petitioners' Motion for Summary Judgment is denied. 

2. The Respondent shall reimburse the Petitioners for one independent educational evaluation of James Brody. 

3. The Respondent shall reimburse the Petitioners for the costs of the private school tuition at Landmark School 
and all related expenses for the 1996-97 school year. 

4. Pursuant to the Interim Order signed August 13, 1997, an lEP meeting shall be convened immediately to 
provide the parties an opportunity to develop an lEP for the 1997-98 school year for James Brody which will appropriately 
serve his special needs in the least restrictive environment and offer as much mainstreaming in the regular classroom as is 
practical to remediate James' disability. 

5. The 1997-98 lEP shall be consistent with the recommendations of Drs. Felton and Ellis concerning the 
remediation of James Brody 's special needs in reading and written expression. 

6. The Petitioners are prevailing parties for the purposes of award of attorneys fees and litigation costs. 

7. This cause is retained for further orders as may by just and proper. 

NOTICE 



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CONTESTED CASE DECISIONS 



In order to appeal this Final Decision, the person seeking review must file a written notice of appeal with the Nortl 
Carolina Superintendent of Public Instruction. The written notice of appeal must be filed within thiny (30) days after th( 
person is served with a copy of this Decision. G.S. 115C- 116(h) and (i). 

This the 25" day of August, 1997. 



Judge William A. Creech 



608 NORTH CAROLINA REGISTER October 1, 1997 12:) 



CONTESTED CASE DECISIONS 



STATE OF NORTH CAROLINA 
COUNTY OF BUNCOMBE 



IN THE OFFICE OF 

ADMINISTRATIVE HEARINGS 

97 ABC 0706 



N.C. ALCOHOLIC BEVERAGE CONTROL, 
COMMISSION 

Petitioner, 



V. 



RECOMMENDED DECISION 



GROVE PARK INN RESORT, INC., T/A 
GROVE PARK INN, 
Respondent. 



APPEARANCES 



For Petitioner: 



For Respondent: 



Fred A. Gregory 
Deputy Counsel 
ABC Commission 

Joseph A. Connelly 
Attorney at Law 
81 Central Avenue 
Asheville, NC 28801 

ISSUES 

Whether permittee knowingly possessed gambling devices on the licensed premises on or about December 3, 1996, in 
violation of G.S. 18B-1005(a)(3); 14-297; 14-295 and ABC Commission Rule 4 NCAC 2S .0207(b). 

FINDINGS OF FACT 

The undersigned Administrative Law Judge finds the following stipulated facts: 



1. 



2. 



That Respondent holds the following ABC permits: Mixed Beverage, Malt Beverage, Fortified and Unfortified Wine, 
and Special Occasions. 

That on December 3, 1996, ALE Agent Sam Darakjy received a phone call from Tonya Ward, Respondent's 
Conventions Service Manager, concerning the legality of the use of a roulette type wheel for a fund raising event. 

That Agents Darakjy and Page visited Respondent's establishment, pursuant to Ms. Ward's phone call, in order to 
render an opinion as to the legality of the device. 

That upon inspection of Respondent's premises. Agent Darakjy and Page found numerous roulette wheels, blackjack 
tables, crap tables, poker chips and playing cards. 

That the above items are gambling devices and are illegal to possess. 

That the gambling devices were only used by the Respondent as props for charitable fund raising events and 
amusements. 

That Respondent no longer possesses any gambling devices. 

That there was no gambling for money or profit by Respondent. 



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609 



CONTESTED CASE DECISIONS 



9. That Respondent maintained possession of the gambling devices in reliance of past ABC Commission opinion that thi 

use of such devices as props for charitable fund raising events was legal. 

CONCLUSIONS OF LAW 

Based upon the foregoing Findings of Fact, the undersigned Administrative Law Judge makes the followin] 
Conclusions of Law: 

1 . The Office of Administrative Hearings has jurisdiction in this matter. 

2. That both parties received proper notice before this contested case hearing. 

3. That the roulette wheel, blackjack table and crap tables found on Respondent's premises are gambling devices a 
defined in G.S. 14-295 and 14-297. 

4. That because of Respondent's reliance on past ABC Commission opinions. Respondent did not knowingly violate th^ 
ABC laws pursuant to G.S. 18B- 1005(a)(3). 

RECOMMENDED DECISION 

Based upon the foregoing Findings of Facts and Conclusions of Law, the undersigned Administrative Law Judgi 
recommends that this action be dismissed and the Respondent be advised that the gambling devices previously possessed by thi 
Respondent are illegal to possess and are violations of the ABC law. 

ORDER 

It is hereby ordered that the agency serve a copy of the final decision on the Office of Administrative Hearings, P.O 
Drawer 27447, Raleigh, NC 27611-7447, in accordance with North Carolina General Statute 150B-36(b). 

NOTICE 

The agency making the final decision in this contested case is required to give each party an opportunity too fil( 
exceptions to this recommended decision and to present written arguments to those in the agency who will make the fina 
decision. G.S. 150B-36(a). 

The agency is required by G.S. 150B-36(b) to serve a copy of the final decision on all parties and to furnish a copy tc 
the parties' attorney of record and to the Office of Administrative Hearings . 

The agency that will make the final decision in this contested case is the North Carolina Alcoholic Beverage Contro! 
Commission. 

This the 15" day of September, 1997. 



Fred G. Morrison, Jr. 
Administrative Law Judge 



610 NORTH CAROLINA REGISTER October I, 1997 12:7 



NORTH CAROLINA ADMINISTRATIVE CODE CLASSIFICATION SYSTEM 



The North Carolina Administrative Code (NCAC) has four major subdivisions of rules. Two of these, titles and 
chapters, are mandatory. The major subdivision of the NCAC is the title. Each major department in the North 
Carolina executive branch of government has been assigned a title number. Titles are further broken down into 
chapters which shall be numerical in order. Tfie other two, subchapters and sections are optional subdivisions 
to be used by agencies when appropriate. 



TITLE/MAJOR DIVISIONS OF THE NORTH CAROLINA ADMINISTRATIVE CODE 
TITLE DEPARTMENT LICENSING BOARDS CHAPTER 



I 

2 

3 

4 

5 

6 

7 

8 

9 

10 

11 

12 

13 

14A 

15A 

16 

17 

18 

19A 

20 

*21 

22 

23 

24 

25 

26 

27 



Administration 
Agriculture 
Auditor 
Commerce 
Correction 
Council of State 
Cultural Resources 
Elections 
Governor 
Human Resources 
Insurance 
Justice 
Labor 

Crime Control & Public Safety 
Environment, Health, and Natural 
Resources 
Public Education 
Revenue 

Secretary of State 
Transportation 
Treasurer 

Occupational Licensing Boards 
Administrative Procedures 
Community Colleges 
Independent Agencies 
State Personnel 
Administrative Hearings 
NC State Bar 



Acupuncture 

Architecture 

Auctioneers 

Barber Examiners 

Certified Public Accountant Examiners 

Chiropractic Examiners 

General Contractors 

Cosmetic Art Examiners 

Dental Examiners 

Dietetics/Nutrition 

Electrical Contractors 

Electrolysis 

Foresters 

Geologists 

Hearing Aid Dealers and Fitters 

Landscape Architects 

Landscape Contractors 

Marital and Family Therapy 

Medical Examiners 

Midwifery Joint Committee 

Mortuary Science 

Nursing 

Nursing Home Administrators 

Occupational Therapists 

Opticians 

Optometry 

Osteopathic Examination & Reg. (Repealed) 

Pastoral Counselors, Fee-Based Practicing 

Pharmacy 

Physical Therapy Examiners 

Plumbing, Heating & Fire Sprinkler Contractors 

Podiatry Examiners 

Professional Counselors 

Psychology Board 

Professional Engineers & Land Surveyors 

Real Estate Appraisal Board 

Real Estate Commission 

Refrigeration Examiners 

Sanitarian Examiners 

Social Work Certification 

Soil Scientists 

Speech & Language Pathologists & Audiologists 

Substance Abuse Professionals 

Therapeutic Recreation Certification 

Veterinary Medical Board 



Note: Title 21 contains the chapters of the various occupational licensing boards. 



1 

2 

4 

6 

8 

10 

12 

14 

16 

17 

18 

19 

20 

21 

22 

26 

28 

31 

32 

33 

34 

36 

37 

38 

40 

42 

44 

45 

46 

48 

50 

52 

53 

54 

56 

57 

58 

60 

62 

63 

69 

64 

68 

65 

66 



12:7 



NORTH CAROLINA REGISTER 



October I, 1997 



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-*' 



BARCLAYS OFFICIAL NORTH CAROLINA ADMINISTRATIVE CODE - 1997 



DESCRIPTION 



CODE 



ANNUAL 
SUBSCRIPTION PRICE 



Title 1 - Dept of Administrarion - Complete Title 201 00 001 

Division of Purchase & Contract 201 10 051 

Federal Block Grant Punds 20110331 

Title 2 - Dept. of Agriculture - Complete Title 202 00 001 

Food & Drug Protection Division 202 15 091 

Structural Pest Control Committee 202 15 341 

Agricultural Markets 202 15 431 

Plant Industry 202 15 481 

Animal Industry 202 15 521 

Title 3 - Dept. of State Auditor - Complete Title 203 00 001 

Title 4 - Dept. of Commerce - Complete Title 204 00 00 1 

Alcoholic Beverage Control Commission 204 15 021 

Banking Commission 204 15 031 

Credit Union Division 204 15 061 

Savings & Loan Division 204 15 091 

Industrial Commission/Workers Compensation 204 15 101 

Savings Institutions Division 204 15 161 

Title 5 - Dept. of Corrections - Complete Title 205 00 001 

Division of Prisons 205 15 021 

Title 6 - Council of State - Complete Title 206 00 00 1 

Title 7 - Dept. of Cultural Resources - Complete Title 207 00 001 

Title 8 - State Board of Elections • Complete Title 208 00 001 

Title 9 - Offices of the Governor & Lt. Governor - Complete Title 209 00 001 

Title 1 - Dept. of Human Resources - Complete Title 2 1 00 00 1 

Licensing of Health Facilities 210 20 101 

Detention Facilities 210 20 201 

Mental Health & Rehabilitation Services 210 20 301 

Social Services 210 20 401 

Children Services/Day Care 210 20 411 

Services for the Aging 210 20 421 

Services for the Blind 210 20 431 

Services for the Deaf & Hard of Hearing 210 20 441 

Employment Opportunities 210 20 451 

Title 1 1 - Dept. of Insurance - Complete Title 21 1 00 001 

Insurance 211 10 011 

Consumer Services 21110 041 

Fire & Rescue Services 21110051 

Agent Services 211 10 061 

Engineering & Building Codes 211 10 081 

Title 1 2 - Dept. of Justice - Complete Title 2 1 2 00 00 1 

Private Protective Services 212 10 071 

Police & Sheriff's Education & Training Standards 212 10 091 

NC Alarm Systems Licensing Board 212 10 111 

Title 1 3 - Dept. of Labor - Complete Title 2 1 3 00 00 1 

Mine & Quarry Safety 213 15 061 

General Safety/OSHA 213 20 001 

Wage & Hour Rules 213 15 121 

Boiler & Pressure Vessel Safety 213 15 131 

Apprenticeship & Training 213 15 141 

Elevator & Amusement Device Safety 213 15 151 

Title 1 4A - Dept. of Crime Control & Public Safety - Complete Title 2 1 4 00 00 1 

Alcohol Law Enforcement 214 00 081 

Victims Compensation Fund 214 00 111 

Title ISA - Dept. of Environ., Healtfi, & Nat. Resources ■ Complete Title 215 00 001 

Environmental Management 215 15 001 

Air Quality 215 15 101 

Water Quality 215 15 201 

Land & Waste Management 215 15 301 

Solid Waste Management 215 15 311 



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Title 1 7 - Department of Revenue - Complete Title 

Taxes on Individuals 
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Title 1 8 - Secretary of State - CompleteTrtle 

Securities [division 

Title 1 9A - Dept. of Transportation - Complete Title 

Division of Highways 
Division of Motor \'ehicles 

Title 20 - Dept. of the State Treasurer - Complete Title 

Title 21 - Occupational Licensing Boards - Complete Title 

Title 22 - Administrative Procedures - Repealed 

Title 23 • Community Colleges ■ Complete Title 

Title 24 - Independent Agencies - Complete Title 

Title 25 - Office of Stote Personnel - CompleteTrtle 

Title 26 - Office of Administrative Hearings - Complete Trtle 

Title 27 - Nortfi Carolina State Bar ■ Complete Trtle 

Nortti Carolina Administrative Code - Complete Code 

(Add S85.00 Shipping and Handling) 

CD-ROM Nortfi Carolina Administrative Code 

updated quarterlvl 

CD-ROM North Carolina Administrative Code 

(When purchased with the Full Code in Print) 

Master Index 

Master Table of Contents 

Binder(s) Titled "Officio/ North Carolina Administratiye Code' 



215 15321 
215 15401 
215 25 001 
215 25 101 

215 25 201 
21525 301 
21525311 

21600 001 

216 10061 

21700 001 

217 15 101 
217 15 201 
217 15271 

217 15 291 

21800 001 

218 10060 

21900 001 

219 10021 

219 10 031 

220 00 001 

221 00 001 
n/a 

223 00 001 

224 00 001 

225 00 001 

226 00 001 

227 00 001 
299 99 981 

266 00 001 

266 50 001 

288 50 001 
288 80 001 
299 90 000 



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